Food prices in Africa’s biggest economy rose for the second straight month to 24.35 percent in February 2023, according to the latest Consumer Price Index (CPI) report.
The CPI report by the National Bureau of Statistics (NBS) shows that food inflation, which constitutes more than 50 percent of the headline inflation rate, rose marginally by 0.03 percent to a 17-year high of 24.35 percent from 24.32 percent in the previous month.
“The slight uptick in food inflation was caused by an increase in the prices of commodities like bread and cereals, potatoes, fish, oil and fat,” analysts at Financial Derivatives Company Limited (FDC), led by economist Bismarck Rewane, said in a recent report.
“This was due to the squeeze in consumer income as a result of the naira cash crunch.”
While Africa’s most populous nation saw an increase in food prices, other countries recorded the opposite. According to a recent Food and Agriculture Organisation (FAO) of the United Nations (UN), global food prices fell in February for the 11th consecutive month.
The UN agency said its food price index, which tracks international prices of the most globally traded food commodities, averaged 129.8 points in February, a marginal 0.6 percent decrease from January but 18.7 percent down from its peak in March 2022.
“The decline in the index reflected drops in quotations for vegetable oils and dairy products that more than offset a steep rise in sugar prices,” it added.
The higher food prices also led to an increase in the country’s headline inflation rate for the second straight month in February. It rose to a 17-year high of 21.91 percent from 21.82 percent in January, according to NBS.
“The contributions of items on a class basis to the increase in the headline index are presented thus: bread and cereal (21.67 percent), actual and imputed rent (7.74 percent), potatoes, yam and other tubers (6.06 percent), vegetable (5.44 percent) and meat (4.78 percent),” the statistical agency said.
Chinyere Almona, director-general at Lagos Chamber of Commerce & Industry (LCCI), said the sustained upward trend in the general price level in recent times has had significant but bothersome impacts on the household and business sectors.
“Apart from eroding purchasing power, it has led to inventory stockpiles. If left unchecked, the high inflation may further constrain production, lead to a steeper rise in poverty figures, frustrate economic growth, and lead to higher unemployment and non-competitive exports, especially in the sub-region,” she said.
She added that the LCCI is concerned about the excessive focus on exchange and interest rates management. “There is an urgent need for monetary and fiscal authorities to find an effective mix of measures and policies to thwart the worrisome trend in inflation, especially staple food prices.”
The NBS report further revealed that core inflation rate, a sub-index of the general inflation rate, dropped for the first time in 11 months in February 2023.
It declined marginally by 0.32 percent points to 18.84 percent in February, the first time since March 2022 from 19.16 percent in the previous month.
“The fall in core inflation was associated with the decline in imported inflation as a result of the decline in inflation in countries like China where Nigeria imports from,” analysts of FDC said.
They said the decrease was also partly due to the ease in fuel scarcity, and a relatively stable exchange rate at the parallel market.