…But petrol price hikes could reverse trend
Food supply improved in the Nigerian market in August on the back of the harvest season, forcing down headline inflation to 32.15 percent.
According to the National Bureau of Statistics (NBS), inflation decreased to 32.15 percent in August 2024 from 33.40 percent in the previous month, as prices of tomatoes, pepper, yam and other food products dropped.
This is as food inflation, a significant driver of overall inflation, declined to 37.52 percent in August, down from 39.53 percent in July.
“We attribute the deceleration to the food basket, which moderated to 37.52 percent year-on-year, largely supported by the onset of the harvest season,” analysts at CardinalStone said in a note.
Analysts at FBNQuest had predicted in their daily morning note last week that Nigeria’s headline inflation would slow further in August.
Read also: Food inflation seen reversing on fuel price hike
“Looking ahead, we expect headline inflation to taper further in August due to the impact of the positive base effect and the continued food harvest season,” they noted.
In a survey of major cities in Nigeria carried out by our correspondents in August, BusinessDay found that the average prices of key staples were declining, easing the burden on cash-strapped Nigerians who had been dealing with accelerating inflation since last year.
The price of a big basket of tomatoes dropped 58 percent in Lagos, from an average of N120, 000 to N50,000 in August.
In Onitsha, the basket cost between N60, 000 and N75,000 at major markets such as Ochanja, and Ose. In Wuse and Dei Dei markets in Abuja, prices hovered between N45,000 and N60,000.
A 50kg bag of white garri sold for an average of N65, 000 as against N75,000 in July, while the average price of a small bucket declined by 42.5 percent to N2,300, from N 4,000 sold in July.
A small bucket of Irish potatoes sold for N4,000 from an average of N12,000 some months ago, declining by 66 percent in the period in Lagos.
A small basket of Habanero pepper fell to an average of N13,000 in August as against N35,000 at the peak of the price surge in May-June, indicating a 63 percent decline.
Read also: Food inflation: We weep each time we go to market, housewives lament
Similarly, the price of a bag of chili peppers reduced from N120,000 to N60,000 in the previous month, while a small bucket sold for N8,000 from N3,500.
“Household pressures remain skewed to food and with the recent drop in prices, especially in key staples, pressure will be reduced,” said AfricaFarmer Mogaji, chief executive officer of X-Ray Consulting, in August.
Although headline and food inflation declined, core inflation, which excludes volatile agricultural produce and energy prices, stood at 27.58 percent in August, up from 27.47 percent in July 2024.
However, analysts are worried that recent petrol priced could reverse the gains.
Petrol price rose from N617/litre to N885/litre in August. The price has further jumped to N950/litre in Lagos and to over N1,019 in Borno State as the Nigerian National Petroleum Company (NNPC) breaks away from costly petroleum subsidies and purchases petroleum products from Dangote refinery.
“The surge in fuel prices is going to affect the government’s efforts in tackling inflation and we are going to see another spike in food prices,” Abiodun Olorundenro, managing partner of Prasinos Farms, said in response to questions.
“Any vehicle running on petrol will be affected by the recent fuel price hike and scarcity. Costs of logistics will surge as well as and this will impact farmers’ production costs,” Olorundero said.
He noted that Nigerians might be getting into a new cycle of food price surge.
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