Nigeria’s food inflation has risen by 110.5% in 5 years, between September 2015 and September 2020.
A comparison of the Composite Food Index within the period under review indicated that food inflation rose from 181.8 index points to 382.7 index points.
This means that the price of food items has not only increased, but more than doubled in the last five years of President Muhammadu Buhari’s administration.
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Similarly, the All Items Index rose by 92.4% during the same period.
Food items that have witnessed significant increases
Data obtained from Nairalytics, the research arm of Nairametrics, revealed that:
- Foreign rice (Caprice) which sold for an average of N14,500 as of May 2019 is now sold for an average of N30,000.
- A 50kg bag of Ijebu garri that sold for N7,200 in May 2019, now costs N13,700.
- A 25-litre keg of vegetable oil sold for N9,750 in May 2019, now sells for N14,625.
- A piece of frozen fish which cost N417 in May 2019, now sells for N625.
Why are the figures going up?
The hike in the cost of staple food items could be attributed to the border closure directive of the federal government that was announced in August 2019.
It is projected to hit 20% by the first quarter of 2021, when the effects of the increase in petrol and electricity prices are accounted for.
Also, yield per hectare for most farming is well below global standards, driving up the cost of whatever is left to be sold to Nigerians.
Farmers also face insecurity, flooding, and sometimes famine affecting their ability to plant and harvest. Even after harvesting, supply chain challenges still persist, leaving farmers to contend with middlemen, transportation, and storage. The result is far less farm produce reaching the final consumer.
What they are saying
Prof. Steve Hanke, an American Applied Economist at the Johns Hopkins University in Baltimore, Maryland, USA, expressed his dissatisfaction over the performance of Buhari’s administration.
According to him, the Federal Government could do more than what it is doing; he described the administration as a failure over security of its citizens, unemployment, and inflation.
He tweeted, “President Muhammadu Buhari has failed. Nigeria is in the grip of chaos. Bandits control major highways.
“The government can’t protect its own citizens from Boko Haram or the corrupt Police. Unemployment stands at 27.1%, and Inflation, which I accurately measure every day and that soars at 30.37%/yr.”
.@MBuhari has failed. #Nigeria is in the grip of chaos. Bandits control major highways. The government can’t protect its own citizens from #BokoHaram or the #Corrupt police. #Unemployment stands at 27.1%, and #Inflation – which I accurately measure every day – soars at 30.37%/yr. pic.twitter.com/LZOzHWkiau
— Prof. Steve Hanke (@steve_hanke) October 28, 2020
What you should know
- On October 15, 2020, Nairametrics reported that Nigeria’s inflation rate rose to 13.71% (year-on-year) in September 2020, indicating 0.49% point higher than 13.22% recorded in August 2020. This was contained in the Consumer Price Index (CPI) report, released by the National Bureau of Statistics (NBS) about two weeks ago.
- According to the report, Nigeria has endured persistent increase in inflationary rate —growing from 12.13% in January to 13.71% in September—the highest recorded in 30 months.
- A closely watched component of the food inflation index rose by 16.66% in September 2020 — a 0.66% increase compared to 16% recorded in the previous month.
- On a month-on-month basis, the food sub-index rose by 1.88% compared to 1.67% recorded in August 2020.
- Meanwhile, the rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, meat, fish, fruits, and oils and fats.
Nigerians spent N13.9 trillion on household consumption in Q4 2020, an increase of 16.6%
Household consumption expenditure of Nigerians rose by 16.59% in Q4 2020 to stand at N13.92 trillion.
The final consumption expenditure of households in Nigeria hit N13.92 trillion in the fourth quarter of 2020. This is according to the recently published Nigerian Gross Domestic Product report (Expenditure and Income Approach), by the National Bureau of Statistics (NBS).
According to the report, Nigeria’s household consumption rose by 16.59% in Q4 2020 to stand at N13.92 trillion, compared to N11.94 trillion recorded in the corresponding quarter of 2019. It also represents a 20.76% increase compared to N11.52 trillion recorded in the preceding quarter.
- Household consumption expenditure in Q3 and Q4 2020 grew by 6.1% and 16.59% year-on-year in real terms.
- The annual growth rate in real household consumption expenditure stood at 0.81% as against a decline of 1.06% recorded in 2019.
- Government consumption expenditure recorded growth rates of 99.18% and 12.13% in Q3 and Q4 2020 respectively, while the annual growth rate stood at 61.58% in 2020 compared to 8.78% recorded in 2019.
- Although Net Exports recorded positive growth rates in the first two quarters of 2020 but turned negative in the third and fourth quarters of 2020. It dipped by 52.39% and 72.61% in Q3 and Q4 2020 respectively.
- By annual consideration, net export declined by 29.55% in 2020 as against a growth of 7.64% recorded in the previous year.
However, national disposable income grew by 4.44% in the third quarter of 2020 and 3.13% in the fourth quarter of the year, while a 3.34% growth was recorded as the annual growth compared to 0.35% growth recorded in 2019.
Compensation of employees, dipped by 2.32% in Q3 2020, before recording an increase of 6.36% in the fourth quarter of the year. The decline in the third quarter could be largely attributed to the downturn caused by the covid-19 pandemic, forcing many organisations in the country to either downsize their staff strength or embark on a pay cut.
What this means
- Consumption expenditure is an important factor in determining economic growth for any country. Nigeria recorded its worst quarterly consumption expenditure in the second quarter of 2020.
- This was due to the effect of the covid-19 pandemic on the Nigerian economy, which eventually led to a second recession in 5 years as Nigeria’s real GDP contracted by 6.1% and 3.62% in Q2 and Q3 2020 respectively.
- It is, however, important to note that Nigeria recovered from the covid-induced recession in the fourth quarter of the year as the real GDP expanded by 0.11% in Q4 2020.
In the third and fourth quarters of 2020, real exports declined by 42.05% and 57.79%, year on year, resulting in an annual growth rate of -26.96% in 2020. However, on a quarter on quarter basis, real exports remained negative from Q1 2020 to Q4 2020.
Due to declining rates of growth in exports and imports in 2020, the growth in the net balance of trade (or net exports) was negative in Q3 and Q4 2020. On a year-on-year basis, the net trade balance declined by 52.39% in real terms in Q3 and also dipped by 72.61% in Q4.
What you should know
- The Nigerian economy expanded marginally by 0.11% in Q4 2020. It, however, contracted by 1.92% in 2020 to stand at N70.14 trillion in real terms.
- The final consumption expenditure of households in Nigeria stood at N42.81 trillion in 2020.
- Individual consumption expenditure for general government stood at N1.68 trillion while collective consumption stood at N4.98 trillion in the same period.
Foreign trade: Nigeria – French trade drops to $2.3 billion in 2020
The volume of trade between France and Nigeria dropped to $2.3 billion in 2020 compared to $4.5 billion in 2019.
The French Government has disclosed that the volume of trade between France and Nigeria dropped to $2.3 billion in 2020 compared to $4.5 billion in 2019, due to the effects of the COVID-19 pandemic.
This was disclosed by the French Minister in charge of Foreign Trade and Attractiveness, Mr Frank Riester, at a meeting with the Nigeria Governors’ Forum (NGF), in Abuja.
“We are optimistic of the future, when the crisis will be ending because we have many companies that have settled here. We want a win-win partnership between our two countries.
We have 100 companies that are settled in Nigeria, representing 10,000 people working in these companies and we want to increase our investments in Nigeria,” he said.
The Minister added that France wants to cushion processes that will enable more Nigerian companies do business in France.
“Tomorrow, I will meet some Nigerian companies that have already invested in France, as others are willing to invest in the country.
“These companies will be invited to a specific meeting in Paris in June, where President Emmanuel Macron will welcome many companies all over the world, and some of the companies will be from Nigeria because we want more Nigerian investments in France,” he added.
What you should know
Nigeria’s total foreign trade for the fourth quarter (Q4) of 2020 rose to N9.12 trillion, representing an increase of 8.88% compared to N8.38 trillion recorded in the previous quarter. Total imports stood at N5.93 trillion, while total export rose by 6.72% from N2.99 trillion to N3.19 trillion.
Export to Europe was N1.07 trillion representing 33.5% of export volume, while import was N2.16 trillion valued at 36.5% of imports volume.
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