Bread prices have risen very fast in Nigeria in recent times at a point when elevated inflation levels are eroding citizens’ incomes.
According to the National Bureau of Statistics (NBS), the headline inflation increased to 32.70 percent in September 2024 from 32.15 percent in August 2024.
It said on Tuesday that the month-on-month inflation rate for September 2024 went up 0.30 percent to 2.52 percent in September.
The major driver of the headline inflation was the petrol price increases, which affected the general price level in the economy.
In September, Nigerians experienced an upward review of petrol prices from N597.00 to N855.00.
Last week, the Nigerian National Petroleum Company (NNPC) increased petrol prices from N950/litre to N998/litre in Lagos and as high as N1,003 in northeastern states, the second increment in two months as petrol price deregulation took full effect.
Read also: Food inflation quickens to 40.8% as garri, bread prices rise
Bread out of breakfast table
Bread prices have increased across the board in the last six to 12 months. A loaf of bread which was sold for N1,000 at grocery shops four months ago now sells between N1,300 and N1,500.
A loaf of bread which was sold at N400 in October 2023 now goes for N800 in various parts of Lagos and Abuja.
According to Jude Okafor, national secretary of the Association Master Bakers and Caterers of Nigeria (AMBCN), “Prices of every ingredient for bread has doubled from year to date and the situation is hopeless for the industry.”
He said the government is yet to address the challenges of the industry and lacks the will to urge millers to use substitutes such as cassava and potatoes in their flour production.
BusinessDay found that a 50 kg of flour, an input for making bread, now sells for N62, 500 as against N39,750 sold in February 2024, indicating a 57.2 percent surge in price.
A 50kg bag of sugar, another input, now sells for N88,000 as against N68,500 in February 2024, indicating a 28.5 percent rise in price.
Also, a carton of yeast comprising 20 sachets, now sells for N70, 000 as against N22,000 sold December 2023. A 15kg of butter now sells for N42,000 as against N18,000 in 2023. Also, a 25kg of vegetable oil has also surged to N60,000 from N N40,000 in December 2023.
Analysts’ views on inflation
Nigeria’s inflation rate in September showed only a modest increase, surprising analysts despite the steep rise in petrol prices, according to Razia Khan, managing director and chief economist for Africa and the Middle East at Standard Chartered Bank.
Khan revealed that month-on-month inflation rose by 2.5 percent, up from 2.2 percent in August, even after petrol prices jumped by approximately 45 percent during the month. “Nigeria’s September inflation rose much more modestly than we expected—only 2.5 percent m/m despite the about 45 percent increase in petrol prices,” she said, noting that the increase was lower than anticipated.
She attributed the subdued inflation to several factors, including tight monetary policy and sluggish income growth, which kept the year-on-year inflation rate at 32.7 percent.
Read also: Bread prices rise as currency woes and war squeeze bakeries
“This likely reflects already-tight policy and squeezed income growth, limiting the y/y rise to 32.7 percent,” Khan explained.
While food price inflation remained a concern, particularly in light of recent flooding that disrupted agriculture, Khan pointed to some positive indicators in the latest data. “Although food price inflation is still considerable—with food products up 2.6 percent m/m and imported food 3.6 percent m/m—we think this print bodes well for the outlook for inflation overall, signaling little spillover from the hike in PMS prices,” she remarked.
Looking ahead, Khan projected that October would likely experience an even more modest month-on-month inflation increase. Although it is possible that the full impact of the subsidy removal may be delayed, she emphasised that other economic developments, including tighter policy measures and greater stability in the foreign exchange market, would likely curb inflationary pressures.
“We are more inclined to think that the further tightening of policy at the end of September—with a 500-basis-point hike in the Cash Reserve Ratio (CRR)—and FX stabilisation of sorts thereafter, will be overriding,” Khan said.
Despite lingering risks, Khan added that the latest inflation data offers some relief, as the likelihood of a sharp surge in inflation appears low.
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), said: “It is troubling that we are witnessing a resurgence of high inflationary pressures after some few months of respite despite policy measures to tame inflation, especially on the monetary side,” Yusuf said.
“Purchasing power has continued to plunge over the past few months. The situation had been further exacerbated by the surging petrol price.”
“The reality is that the dynamics driving inflation are yet to be effectively subdued,” he explained, identifying key drivers such as the depreciating exchange rate, rising fuel and transportation costs, supply chain disruptions, high energy prices, and climate-related events like flooding. “These are largely supply-side issues,” Yusuf added. He also pointed to seasonal agricultural output, which often triggers short-term price hikes for certain food crops.
Yusuf warned that inflationary pressures are raising production costs, undermining profitability and weakening investor confidence.
He called for urgent government intervention to address the production, productivity, and security challenges facing the economy.
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