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Naira scarcity, restrictions trigger surge in food prices – Survey

Nigeria’s Naira Woes Point to a Bigger Problem in Africa

Naira scarcity, movement restrictions imposed during the country’s general elections and high transportation costs in Africa’s most populous country have triggered surge in food prices, a new survey found.

A breakdown of the survey by a Vendease, a Nigerian food procurement startup show that the price of a 5kg aeroplane basmati rice increased by 29.4 percent to N46,200 in mid-March from N35,700 in January and the price for 50kg premium tomatoes rose by 22.2 percent to N24,200 from N19,800.

The cost of a full basket of tomatoes (50kg) was N37, 400 from N35, 200, sweet potatoes rose by 9.1 percent to N26, 400 from and 100-110kg of egusi rose by 12 percent to N308, 000.

“The limited supply of cash owing to the naira redesign policy, as market suppliers were demanding extra charges for payments received via bank transfers, due to movement restrictions to the general elections, food supply trucks could not travel from the north were responsible for the price increases,” it said.

It said another factor that contributed to the general increase in prices across product categories was the general increment in utility and fuel prices. “This practically affected the general prices of goods and services.”

According to the National Bureau of Statistics (NBS), food prices rose for the second straight month to 24.35 percent in February from 24.32 percent in the previous month.

“The contributions of items on a class basis to the increase in the headline index are presented thus: bread and cereal (21.67 percent), actual and imputed rent (7.74 percent), potatoes, yam and other tubers (6.06 percent), vegetable (5.44 percent) and meat (4.78 percent),” the statistical agency said.

The higher food prices also led to an increase in the country’s headline inflation rate for the second straight month in February as it rose to a 17-year high of 21.91 percent from 21.82 percent in January, according to NBS.

Christele Chokossa, consultant at Euromonitor International, said from a consumer perspective, the circumstances have resulted in most affected households to spend less on discretionary goods since they need to be cautious in using their cash reserves.

“Overall, the situation is worsening in an already challenging retailing landscape dealing with the rising cost of living, currency depreciation, and global supply chain disruptions, to name a few factors,” she said.

Read also: Naira crunch: How banks can regain trust

Chokossa added that the latest statistics from the Central Bank of Nigeria are already reflecting the impact on food inflation as it peaked to the highest rate reported since 2005.

While Africa’s biggest economy saw an increase in food prices, other countries recorded the opposite. According to a recent Food and Agriculture Organisation (FAO) of the United Nations (UN), global food prices fell in February for the 11th consecutive month.

The UN agency said its food price index, which tracks international prices of the most globally traded food commodities, averaged 129.8 points in February, a marginal 0.6 percent decrease from January but 18.7 percent down from its peak in March 2022.

“The decline in the index reflected drops in quotations for vegetable oils and dairy products that more than offset a steep rise in sugar prices,” it added.

A recent report by Euromonitor International said the high inflationary pressures affected the consumer food service industry last year.

“While there was double-digit current value growth, constant value sales fell and there were limited openings of outlets, as continuing soaring inflation hit consumer purchasing power,” it said.