• Wednesday, February 21, 2024
businessday logo

BusinessDay

Food price index soars 263% under Buhari

January global food price hits 3-year low

Nigeria’s consumer price index (CPI) for food, which is used to measure the level of food inflation in the country, has risen by 263 percent under President Muhammadu Buhari’s administration, BusinessDay findings show.

In April 2023, the CPI for food in Nigeria stood at 640.0, compared to 176.3 points in May 2015, when President Buhari assumed office.

The index measures the average change over time in prices of major food items consumed by people. It measures changes in prices using major food items captured in a basket of consumer goods and services purchased by households.

According to the National Bureau of Statistics, the items that constitute the food basket, based on classifications, according to the six geo-political zones in the country, are brown beans, boneless beef, 500g sliced bread, white garri, onion bulb, 1 bottle of palm oil, local rice, tomato, wheat flour, Golden Penny (2kg), and yam tuber.

Prices of these items are monitored monthly for consequent evaluation and analysis. On a state-by-state basis, however, 43 food items are selected in total and have their prices tracked.

The movement of the CPI is the main measure for the inflation rate. Despite significant intervention to reduce Nigeria’s dependence on food importation, the country remains largely exposed to the global food crisis.

The imported food index rose by 243 percent, a major contributor to the rise in the food index.

Read also: FG admits spending over N13trn on subsidy payments in 16 years

“There are no measures in place to address any urgent food crisis and long-term sustainability of the country’s food system,” said Victor Olowe, a professor and agronomist at the Institute of Food Security, Environmental Resources and Agricultural Research.

According to him, farm inputs are not easily available and are not affordable for farmers, and the high cost of diesel has compounded the challenges in the supply chain.

Significant increases in the country’s headline inflation have been recorded against the backdrop of food inflation. Soaring food prices will continue to impact headline inflation.

The rise in the food index has been caused by increases in prices of food products, bread, cereals, potatoes, eggs, yam and other tubers, fruits, meat, fish, oil and fat.

Food inflation rose to 24.61 percent in April 2023 from 9.78 percent in May 2015. The rising rate of food inflation is evidenced in the rising prices of food items such as rice, beans, bread, yam, vegetables, fruits, and eggs, which have all gone up by at least 100 percent between 2015 and this year.

“With a food inflation rate of more than 20 percent, it is safe to assume that the share of food expenses would have increased to more than 65 to 70 percent with the negligible increase in income,” said Temitope Omosuyi, an investment strategy analyst at Afrinvest Limited.

Omosuyi said that more specifically, the rising prices have worsened food insecurity in the country.

Food production in the country is still largely insufficient to satisfy its 200 million people. Nigeria’s widening food deficit was highlighted in the Agriculture Promotion Policy (2016-2020) document of the Federal Ministry of Agriculture which shows there are 20.14 million tonnes of crop deficit and 60 million poultry birds deficit.

Nigeria’s over-reliance on oil revenue plunged the economy into a recession in 2016 following the crash in the price of crude oil, with the federal government recording a fiscal deficit of N1.55 trillion in that year and N5.60 trillion in 2020, according to the CBN.

The Food and Agriculture Organisation (FAO) in a 2023 report said that about 25.3 million Nigerians will experience acute food insecurity in the 2023 lean season (period between planting and harvesting).

Consumers in Africa’s biggest economy are struggling to keep up with rising prices of basic foods. Real incomes have been falling consistently, implying that people can now afford fewer amounts of food for sustenance.

A combination of ineffective policies, global economic headwinds, and socio-economic vices, have seen Nigerians’ purchasing power erode at a very fast pace, experts have said.

They also predict that the inflation rate will increase further in the coming months and may put many more Nigerians on the brink of poverty.