Food inflation surges despite drop in global commodity prices

Nigerian consumers are not benefiting from the drop in global commodity prices as food inflation hits 23.34 percent in September, highest in 17 years.

Nigeria’s food inflation rate moves in opposite direction with global food prices, as it records its seven consecutive month high despite a drop in global food price index drops for the sixth consecutive month.

The food and Agriculture Organisation (FAO) United Nations reported that the global Food Price Index (FFPI), averaged 136.3 points in September 2022, down 1.5 points (1.1 percent) from August, marking the sixth monthly decline in a row, while the National Bureau of Statistics (NBS) reported today that in the month of September, Nigeria’s food inflation hits 23.34 percent on a year-on-year basis.

The FAO Food Price Index (FFPI) is a measure of the monthly change in international prices of a basket of food commodities. It consists of the average of five commodity group price indices weighted by the average export shares of each of the groups over 2014-2016.

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NBS said that the rise in food inflation was caused by increases in prices of bread and cereals, food products i.e., potatoes, yam, and other tuber, oil, and fat.

On the other hand, FAO explained that the FFPI’s decline in September was driven by a sharp fall in the international prices of vegetable oils and moderate decreases in those of sugar, meat and dairy products, more than offsetting a rebound in the cereal price sub-index.

This is a 0.95 percent increase from the previous month 23.12 percent. Although this change is marginal, it is the highest since August 2005 when food inflation hit 35 percent according to Trading Economics.