…Data shows direct relationship b/w food inflation, petrol price
In July 2024, food inflation declined to 39.53 percent from 40.87 percent in June.
It was a relief for many families who were spending most of their incomes on food. However, the excitement may be temporary given the recent increase in petrol price, according to data analysed by BusinessDay.
Data shows that each time the price of premium motor spirit (PMS) or petrol increases, food inflation moves in the same direction.
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Food inflation rose from 24.8 percent in May to 25.25 percent in June 2023 when petrol price increased from N200 to N525 per litre after President Tinubu ended the country’s gasoline subsidies on May 29.
When the pump petrol price further increased to an average of N617 per litre in July 2023, food inflation rose to 29.3 percent in August 2023 from 26.9 percent in July 2023.
It is a no-brainer. Petrol-reliant vehicles are used to ferry agricultural products from rural areas to townships and state markets. And truck drivers often raise their fares each time petrol prices rise.
At Ore in Ondo State, BusinessDay saw petrol-reliant vehicles a week ago moving food products from other southern Nigerian states to the country’s biggest market, Lagos.
Also, a lot of inter-state movements take place from farms to markets.
“Last month’s decline in food inflation was just temporary. 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 premium motor spirit (petrol) will be affected by the recent fuel price hike and scarcity. Cost of logistics will surge as well as and this will impact farmers’ production costs,” Olorundero further said.
He noted that Nigerians might be getting into a new cycle of food price surge.
Nigeria’s cost of living eased for the first time since late 2022 in July, offering an unexpected respite for households.
Monthly food inflation in the country slowed for the first decline in 18 months as prices of key staples in Nigeria’s diet–garri, tomatoes, pepper, yam and potatoes – fell on improved supply.
In a survey of major cities in Nigeria, BusinessDay found that the average prices of some key staples declined in July- August, easing the burden on cash-strapped Nigerians who had been dealing with accelerating inflation since last year.
Experts say these gains will be reversed with the recent fuel hike as food accounts for 60 percent of households’ income.
Also, the recent surge in petrol pump prices across the country is further straining the finances of millions of people and amplifying a cost of living crisis in Africa’s biggest economy.
The United Nations (UN) had, in early July, predicted that 82 million Nigerians – about 64 percent of the country’s population – may go hungry by 2030 if the government fails to tackle issues limiting agricultural productivity.
In April 2023, the United Nations World Food Programme (WFP) said one in eight Nigerians – 24.8 million people – were facing acute hunger.
One major reason for the #EndBadGovernance protest in August for 10 days was over the worsening costs of living crisis spearheaded by food inflation.
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“Prices of items, especially food, are going to start surging. Farmers need fuel for their farm operations and any additional cost will be passed to the end products,” Jude Obi, president of the Association of Organic Agriculture Practitioners of Nigeria, said in response to questions.
“This will also accelerate the cost of living crisis and things might even get worse than before,” he added.
