Nigeria’s current food inflation rate stood alarmingly high at 40.1% in March 2024, as revealed by recent data by the National Bureau of Statistics (NBS).
However, this disheartening statistic has done little to quell the frustrations of Bisi Omobolanle, who hissed in exasperation while standing at the market stall, witnessing the trader tallying up the costs of her food items.
- As the trader continued to punch the price into her calculator, Omobolanle, unable to stomach her frustrations any further, confronted the trader about the drastic price changes, “Madam, yesterday you quoted N800 for spaghetti, and today it’s N1000. Are we now importing spaghetti or are we driving ourselves into ruin in this country?”
The trader, already aggravated by the accusation, swiftly muttered a few words, directing Omobolanle to purchase her items elsewhere, while bystanders attempted to mediate.
Such encounters are all too familiar to many Nigerians, epitomized by the popular adage, “yesterday’s price is not today’s price,” humorously encapsulating the rapid fluctuations in the cost of goods.
Optics for traders
For traders like Bola Ishola, a middle-aged wholesale grocery seller in Oyo State, the challenges of navigating these turbulent economic conditions have become increasingly daunting. Reflecting on the ordeal, Ishola lamented:
- “Honestly, if I weren’t so meticulous, I’d be out of business. Explaining these price fluctuations to customers often leaves them doubting our integrity.
- So, for every trip I make to the market to restock, I have to add extra N100,000-N200,000 to be able to purchase new items. Thank God that prices began to decline two weeks again, but now, prices are jumping again. I am really fed up at this point. Even though my purchases have increased, the value has dropped considerably.
Ishola further elucidated on the profound impact of these price hikes, revealing that the cost of running her business has more than doubled over the past two years.
- “I started with N400,000, Then, with N100,000 you could buy four bags of rice. But now that amount can only buy 1 bag and a half. Can you imagine that?” she explained, citing staggering increases in the prices of essential commodities like rice and beans.
- For example, I bought a 50kg bag rice at N55,000 and sold it to customers. I went back to the market the following week, it had increased to N57,000. Today, rice is about N70,000 for a 50kg bag. I bought it at N88,000 the other day, but its price is now N90,000!
- “The only way to manage the fluctuating price is to not stock up too much, sell as you go is what we now do.”
Mrs. Kemi Topa-Omeza, a trader in a market in Ogun State, highlighted her shift in purchasing strategy, opting to refrain from buying in bulk. Pointing to a small bag of beans brought by her supplier, she emphasized its exorbitant price of N90,000. “Now I only buy as I sell,” she said, gesturing towards the medium sized sack.
- “You cannot stock up too much; otherwise, the market will hurt you.”
She elaborated on the scarcity-driven price hikes, attributing them to the unfortunate circumstances facing farmers, many of whom have been either killed or injured.
Consequently, the limited supply fails to meet the heightened demand, exacerbating the cost burden for traders like herself.
Topa-Omeza emphasized the considerable financial investment required to sustain a business in such conditions, suggesting that entry into the business now demands substantial capital, approaching N1 million or more at the minimum.
Expressing the broader impact of the price hikes, she lamented the dwindling initial capital and the challenge of sustaining the business amidst escalating costs.
- “If you want to venture into this business now, you’ll need a substantial amount of money, nearly up to N1 million or more, depending on the scale you intend to operate.
- “However, overall, we’re also grappling with the impact of the price hikes. Our initial capital is dwindling, making it increasingly challenging to sustain the business. As a result, you’ll often find us injecting additional funds when we get to the market.
- “For instance, a bag of garri now costs about N60,000, a significant surge from the N4,000 we used to pay some years ago.
- “Sometimes, when I restock, I feel like I’m misplacing money because the quantity of items acquired seems insufficient compared to the expenditure incurred.
Why food prices continue to skyrocket
In line with the factors driving the surge in prices, the increase in food costs has been largely attributed to the depreciation of the naira, conflicts in food-producing regions, and soaring transportation expenses.
The latest food price watch for March 2024, published by the National Bureau of Statistics (NBS), revealed that certain food items have witnessed over 100% year-on-year increases.
A previous report by Nairametrics highlighted the multifaceted nature of food inflation, aside insecurity hindering food production. Mrs. Ijeoma Ezeasor, a Director at Cutix Plc., cited challenges stemming from the COVID-19 pandemic that have continued to disrupt Nigeria’s supply chain.
She emphasized the adverse effects of foreign exchange instability, particularly at the ports, exacerbated by practices within the Nigeria Customs Service which are placing local manufacturers at a disadvantage.
Ezeasor further noted the prevalence of non-state actors extorting funds from agricultural transporters along highways, exacerbating the cost burden on consumers.
Mummy Ebun, a provisional items seller in Ogun State, expressed bewilderment over the persistent price increases, attributing them to general inflation compounded by economic uncertainties. She lamented the domino effect of inflationary pressures stemming from various national challenges.
What govt officials, experts say
In a recent report by Nairametrics, Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), highlighted that government purchases of palliatives are significant contributors to the escalating food prices in the country.
During the latest Monetary Policy Committee (MPC) meeting held between March 25 and 26, 2024, Cardoso emphasized that new inflation drivers were emerging, extending beyond conventional monetary factors.
His remarks were disclosed in a document released by the CBN summarizing the positions of the MPC members.
He also pointed out seasonal factors such as price hikes during religious fasting and festive periods that are contributing to price cyclicality.
Cardoso advocated for collaborative efforts between fiscal and monetary authorities to effectively address these evolving sources of inflation and achieve comprehensive price stability.
Echoing sentiments from a Nairametrics February Webinar, Ogaga Ologe, Finance Director of Cadbury Nigeria Plc, stressed that attributing rising costs solely to factors like diesel prices is no longer sustainable. He pointed out the inevitability of price adjustments to reflect fluctuating input costs, citing the ongoing instability in the economy as a driving factor.
Ologe concluded that maintaining price stability amid changing economic conditions poses significant challenges for manufacturers, underscoring the need for a more stable economic environment to mitigate such fluctuations.
