• Friday, April 19, 2024
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BusinessDay

Nigeria faces fresh spike in food prices on fuel price hike

Kogi, Kwara, Rivers, Akwa Ibom and Imo are states with highest food prices

The recent hike in the prices of fuel in Africa’s largest economy has led to a fresh spike in food prices, dashing hopes of returning to a more stable market condition.

The fuel price has soared by an average of 174.6 percent in two weeks to N526.7 per litre from an average of N191.8 per litre, according to BusinessDay’s calculation of NNPC’s new/old price list.

Last week Monday, President Bola Tinubu during his inaugural speech announced the removal of the petrol subsidy.

One sector that has begun to feel the effect of his announcement is the food sector. At Cele market, the marketers were vocal about their displeasure; the hike in transport fare and food products is taking them by storm.

“Before I spend between N700 and N500 to Mile 12 Market, where I buy the food items I sell. Now, I pay N1,500 and N2,000. I have to transfer the additional costs to my customers,” Adeola Olakunle, who sells vegetables told BusinessDay.

Musa Idiris, a trader at Mile 12 Market said the country is going to experience another round of spike in food prices owing to the subsidy removal.

“Just last week, we sold a 50kg parboiled rice (foreign variety) for N31,000 now we are selling it for N36,000 because the cost of transporting the rice from where we buy from has doubled,” he said.

Read also: Petrol market in confusion as NNPC gives up sole supplier role

“We have no choice but to transfer the extra cost to the consumers,” he added.

In Africa’s biggest oil-producing country, food producers and retailers are now facing intense pressure from rising energy costs as they have to spend more on fuel to transport their goods from one point to another.

Food prices have been making a rapid climb in Africa’s most populous country since August 2019 when the country shut its borders from neighbouring countries and continued unabated owing to supply chain disruptions induced by the Covid-19 pandemic.

Now, the surge is at a faster pace owing to a cash crunch that obstructed economic activities in the first quarter, accelerating inflation and the recent subsidy removal.

Bintu Obilaja, fish seller noted that prices of foodstuffs are already surging owing to the recent hike in food prices.

She noted that since the subsidy removal, the cost of food transportation has doubled, thus prices have started surging again affecting commodity prices.

“Everything is now expensive. Before one carton of titus sells for N30,000, but now it is being sold for N40,000.”

Ajaewole Ayoola, garden egg seller also said: “Market is higher than before. When you buy it, bringing it down here is now a problem again. For instance, the bus will carry you with your load for N1000, now we beg them to carry for N3000, with begging. I get my market from Mile 12.”

He further expressed how tough the market has grown in the wake of the subsidy removal, “Before, we sold paint for N2,500, now it is N4,000. Although it is not in season, the price has changed from what it used to be.”

Another garden egg seller, an elderly woman, lamented about the dramatic effect of subsidy removal on her business.

“A small bag of garden eggs sold between N2,000 and N2,500 now sells for N6,000. I still have to transport it to my shop which is another cost,” she explained.

“I have to also increase the price to recover my money and also make a profit,” she added.

Inflation in Africa’s biggest economy accelerated to 22.22 percent in April and food inflation surged by 24.61 percent.

The inflationary pressure has reduced consumers’ disposable income, hence, making basic needs elude Nigerians.

The limited purchasing power of Nigerians puts basic food commodities out of the reach of many and a country with over 23.2 million unemployed people indicates that the threat of famine is potent.