Food prices soar despite global prices hitting 7 year low

Food prices in Nigeria have been on upward trajectory despite the fall in global prices to almost a seven-year low at the start of the year on the back of sharp declines in commodities, particularly sugar.
The global food price index averaged 150 points in January, down 16 percent from a year earlier and registering its lowest level since April 2009, the Food and Agricultural Organisation (FAO), said in its recent food price index.
A recent market survey by BusinessDay on the prices of food items in some selected market in Lagos shows that prices are much higher compared to a month ago which market sellers attributed to power failure and increase in the exchange rate of naira to the dollar.
Price increases were recorded in nearly every segment of household’s goods and consumables, which has squeezed consumers spending pattern in recent months.
Chike Cletus, provision store seller at Mile 12 market, said, “Prices of provision have increased because of high exchange rate. Dollar now exchange for N310.”

“Companies need dollars to import their raw materials. The consumers have to pay more since exchange rate is high,” Cletus said.

Naira exchanged for N337 to a $1 as at the time of writing at the parallel market.

“A carton of fish I use to buy for N8000 is now N13, 000 and I still spend more than a N1000 daily to buy fuel to power my generator for my deep freezer. I have to add all this additional cost to the fish I sell to my customers,” said Titilayo Adedeji, a frozen food seller at Ile-Epo market, Abule-Egba.

This shows that the price of fish has increased by 63 percent.

Nigeria’s inflation rate in January remains unchanged at 9.6 percent y/y as food prices surged, still exceeding the central bank’s band for the eight consecutive months.

Staple foods prices have increased across the country due to naira restriction, which has increased the cost of production for manufacturing firms, analysts say.
Nigeria’s economy, which relies on oil for two-thirds of government revenue, has been battered by crude prices falling 42 percent in the last year to below $30 a barrel. Efforts by the central bank to stem the fall of the naira by stopping banks from trading dollars are blamed by some analysts for accelerating inflation by preventing businesses from importing all the items they need to operate.

Meanwhile, global prices are falling and FAO attributed the lingering decline in basic global food commodity prices to ample supply of agricultural commodities, a slowing global economy, and the strengthening of the US dollar.

Josephine Okojie