Recently, Nigerians have been grappling with a persistent increase in food prices. According to the National Bureau of Statistics, in its latest food prices watch, staple food items consumed by everyday Nigerians surged by double digits in May 2023 on a year-on-year basis.
The survey included staple food items like local rice, tomato, bread, fish, and beans, amongst others. The year-on-year increase for certain items varied from 10% to a staggering 48%, underscoring the tremendous difficulty faced by Nigerians in accessing three square meals per day.
For example, the average price of 1kg of tomato increased by 17.68%, year-on-year from N423.48 in May 2022 to N498.34 in May 2023. On a month-on-month basis, the average price of this item increased by 2.73% in May 2023. The average price of 1kg of Rice local (sold loose) rose by 24.06% YOY from N447.51 in May 2022 to N555.18 in May 2023. On a month-on-month basis, it increased by 1.54% from N546.76 in April 2023.
Similarly, the average price of 1kg of Beans, Yam tuber and unsliced bread (500g) rose by 17.5%, 22.84% and 30.60% respectively on a YOY basis. Evaporated tinned milk (Peak) in the 170g size witnessed a staggering 48% price increase.
Amid the current economic reality in the country, there is no indication that food prices will decrease in the foreseeable future. The prevailing trend suggests that prices are likely to continue their upward trajectory.
Nigeria is battling double-digit inflation, which is at a prohibitively high rate of 22.41% as of May. Consequently, this has eroded the purchasing power of many Nigerians. The Central Bank of Nigeria in its capacity has implemented various inflationary measures, including the Naira redesign and interest rates hike to the highest level seen in almost two decades. However, the story remains the same with food inflation reaching 24.82% on a YOY basis.
Worse still, the recent removal of fuel subsidies and the Naira float is expected to intensify the existing inflationary pressures in Nigeria, so it is imperative for the government to embark on targeted social welfare programs to alleviate the economic burden of the citizens.
While the promise of rolling out palliatives for poorer citizens accompanied the subsidy removal, there has been a lack of visible economic shocks from the Federal government thus far. However, it is worth acknowledging the commendable efforts of individual states, such as Borno, in implementing their interventions. For instance, the state government recently rolled out 50 luxurious buses and 30 pick-up vans to transport farmers free of charge from their communities to farmlands. This initiative aims to alleviate the high cost of living caused by the withdrawal of fuel subsidies, which has subsequently impacted transportation costs.
Transportation cost is a significant component of the cost of production, and a high cost of production translates to a high price of produce. By subsidizing transportation, the additional expenses that would have been passed on to customers can be eliminated or minimized. While this measure alone may not be a definitive solution to reducing food inflation, it can potentially contribute to stabilizing or reducing food inflation, particularly if implemented on a wider scale.
Reducing food inflation requires a comprehensive approach, including enhancing access to credit and inputs, promoting value chains, and investing in infrastructure, among others. This will outrightly boost local production and reduce the country’s over-reliance on imported produce which can help fight inflation in a more effective way than monetary policies.
