Reasons for rising food prices
CHIMA NWOKOJI, FUNMILAYO AREMU and ADEOLA OTEMADE report on the lamentations of Nigerians
amid rising food costs despite official claims to the contrary.
For many Nigerians, life and life are becoming extremely difficult. Many of them face difficulties in acquiring the essential basic necessities of food, clothing and shelter.
The situation today is such that Nigerians are moaning under the rising prices of food, as well as other essentials, making it difficult for many people to get hold of them. While the minimum wage for government employees remains N30,000, the ability of a worker to afford a bag of rice that goes for N28,000 becomes nearly impossible.
With the number of poor Nigerians increasing daily, the World Bank even predicted that “rising food prices in the country could push six million more Nigerians into poverty.” The reason for this claim is not far to seek, as Nigerians, like never before, continue to moan under the weight of inflation without commensurate increases in their wages. The price hike seen between June 2020 and June 2021 alone, according to the World Bank, “could push an additional six million Nigerians into poverty as urban areas are disproportionately affected.”
Food prices continue to rise
However, in its most recent report on inflation, the National Bureau of Statistics said that the Consumer Price Index (CPI), which measures the rate of change in the prices of goods and services in the country, has declined for the seventh time in a row to 15.99% in October 2021. The bureau added that the figure was 1.76% higher than the rate recorded in October 2020 (14.23).
For many Nigerians, the numbers do not add up as commodity prices continue to rise, putting several food items out of reach of consumers. When the Sunday Tribune challenged food vendors on why food prices continued to rise, he explained that the cost of transporting food from the north of the country had increased exponentially, resulting in a corresponding increase. food prices. Many of them have expressed disappointment with the bad sale, saying consumers don’t frequent them like they used to.
Suliyat Arisekola, a food vendor at Apata Market in Ibadan, Oyo state, told the Sunday Tribune that food prices have become unaffordable for many of her customers.
“Rice now costs 25,000 N, but two weeks ago it was 24,500 N. A jerry can of vegetable oil costs 28,000 N. The one I just finished selling was 27,000 N. Milk Three Crown now costs N 270 per box and N 10,800 per box. Food prices are not at all stable, ”she lamented.
Although bean prices have temporarily dropped to N 1,200 due to the availability of new types of beans and also that of garri at around N 700 or less, Ms. Raimo Adeleye, another food vendor at the market de Molete, in Ibadan, revealed that the food situation is getting out of hand. Many Nigerians, she insisted, are very hungry, as some of her clients, she says, are now begging either to buy on credit or to receive food.
“Despite the drop in prices, attendance remains low; People have no money. Some of my clients are now buying on credit. We also borrow money to run the business, so we can’t afford to donate food like that. A lot of people are hungry and don’t have the money to eat, ”she explained.
Factors influencing the rise in food prices.
Besides inflation caused by the country’s troubled economy, the cost of transport and devastating insecurity in the northern part of the country, which has forced farmers to abandon their farms, traders have accused Nigerian customs officials for increasing the cost of food products.
According to Adeleye, many traders often had their goods seized by customs officials and had to pay huge sums of money to get them released. This in turn contributes to the increase in food prices.
“My rice suppliers have told me that the goods are always held up and they have to collect them with a lot of money. “Every time they get their goods back, they will have to inflate the prices in order to recoup their investment. A lot of goods are seized so it will definitely be expensive once the suppliers get their goods back, ”explained Adeleye, noting that the bad economy affected people’s incomes, which in turn caused the plight of salespeople. ‘food.
Nigeria’s food prices and specific inflation rate
Reacting to the SNB’s data on the inflation figure, however, analysts are divided in their opinions. While a public policy analyst, Mr. Kalu Ajah, wondered why the inflation rate in Nigeria falls to 15.99 percent while food inflation is up 18.34 percent in the same report , others explained that the current inflation figures mean that there is a slight reduction in the rate at which the cost of items increases.
“One wonders how the food which accounts for about 51% of the CPI in Nigeria can rise but inflation falls,” Ajah said, as did research analysts at Afrinvest (West) Africa Limited in a response by Email to the Sunday Tribune inquiry said Nigeria’s food prices are still high despite slowing inflation due to imports.
“In terms of month-to-month (m / m) performance of each item in the CPI basket, we saw the largest increase in the imported food index, up 136 basis points (bps) to 444.3 index points in October 2021. We attribute the increased pass-through effect of the high inflation rate in advanced economies and the low exchange rate of the Naira.
“We expect the headline inflation rate to moderate further on an annual basis in November to 15.6% due to a high base year effect, although the protracted insecurity issues, Supply chain bottlenecks and the likely increase in electricity tariffs are potential downside risks to this projection, ”analysts said.
Professor Uche Uwaleke, president of the Association of Capital Market Academics, explained in his own response that it is possible that the marginal decline in food inflation does not reflect the actual decline in staple food prices, but “ resulting from the “base effect” associated with the methodology for calculating the CPI on an annual basis.
Uwaleke said, “The insecurity which has a direct impact on food inflation, the recent devaluation of the naira and the likely rise in pump prices, fuel and electricity tariffs”, which are the main drivers, are still present.
In his own response, a former Trade Union Congress (TUC) president Peter Esele questioned the parameters used by the NBS to measure the rate of inflation. According to him: “I am sure many Nigerians will ask if those who work in the NBS are from the moon. Even the price of the naira, which is the exchange rate, has gone up. The price of cooking gas has increased by more than 100%. The price of every product on the market has skyrocketed. So, I ask the NBS, what metrics did they use? “
Esele pointed out that if the prices of goods and services are rising at a faster rate in America, Britain as well as across Europe while it is reversed in Nigeria, this suggests that Nigeria has a different definition of what the inflation rate is.
“Why is the price of cooking gas increasing? This is the trend in the international market. The UK government is subsidizing gas now because winter is here. What does the Nigerian government subsidize for its citizens? No one needs to talk about decelerating or accelerating inflation. The market is there to determine what the rate of inflation is. The NBS cannot say the exact opposite of what the market and the pockets of Nigerians are saying, ”he stressed.
Likewise, a World Bank report titled, “COVID-19 in Nigeria: Frontline Data and Pathways,” states that COVID-19 has continued to threaten food security in Nigeria as households and businesses have failed. yet to recover from the devastating impact of the pandemic.
According to the World Bank, disruptions to the food supply chain caused by the pandemic have resulted in higher food prices in Nigeria. He also said that the CBN’s decision to encourage local production by not allocating foreign exchange to food and fertilizer importers also contributed to the rise in food prices.
“In addition to rising food prices, soaring utility costs (fuel and electricity and, more recently, gas prices) continue to weigh on the average Nigerian consumer. Despite the reopening of land borders, food prices continue to rise as trade flows have not yet returned to normal. Clashes between farmers and herders continue to hamper increased food production. In addition, local production still lags considerably behind consumption, ”said the multilateral institution.
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