Commodity prices keep rising in Nigeria on a daily basis. Nigerians are not feeling the impact of the www (CBN) monetary policy tool designed to curb rising commodity prices. Many Nigerians grumble each time they buy the same commodities at higher prices than they did previously. Prices have been hard to predict in Nigeria because of their high volatility.
In Nigeria, high commodity prices have significantly reduced the value of money. Nigerians now pay almost five times for the same quantity of goods and services they bought in 1999.
The household consumers are the ones feeling more pain. The continuous rise in commodity prices in Nigeria is eroding the value of money meant for investment and the real GDP growth rate in 2022.
Many Nigerians are feeling pain as they can no longer eat twice a day due to high commodity prices. The majority of Nigerian consumers do not bother anymore with what food they eat; the target is to survive the prevailing economic situation, hoping that the situation will improve.
Many other Nigerians now buy fewer quantities of consumables due to the prevailing high commodity prices in the market. Macroeconomic studies hold that consumption expenditure is the driver of economic growth. Reduction in private consumption in the case of Nigeria is likely going to affect the GDP growth rate in 2022.
According to the reports released by the National Bureau of Statistics (NBS), the average price of 1kg of beans rose on a year-on-year basis by 50.1 percent from N331.48 in February 2021 to N497.54 in February 2022. The average price of bread sliced 500g increased year on year by 34.11 percent from N326.61 in February 2021 to N438.03 in February 2022.
Likewise, the average price of 1kg tomato increased from N367.01 in January 2022 to N393.08 in February 2022, which means a 7.10 percent rise. Also, the average price of groundnut oil (one bottle) stood at N971.01 in February 2022; this shows an increase of 3.18 percent from N941.10 in January 2022.
The rising commodity prices in the market are now aggravating the prices of raw materials used by manufacturers. The manufacturers have since started feeling the pain of high prices as the cost of production has tripled, and it has become so difficult to produce optimally. The prevailing situation in the manufacturing sector has the potential of aggravating youth unemployment in Nigeria.
There are diverse opinions on the causes of rising commodity prices in Nigeria. Many Nigerians believe that rising commodity prices in the market are coming from a shortage of food supply, insecurity, high cost of production, fuel price hike, and excess money supply by the CBN.
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Many other Nigerians hold firmly that the sellers are the major cause of rising commodity prices in the markets. They substantiated their opinion by accusing the sellers of abnormal profits.
A survey of the market revealed that the retailers are aggravating rising commodity prices in Nigeria. The survey showed that a bag of sachet water is sold to the retailers for N180 in most parts of the country. A bag of sachet water contains 20 pieces; the retailers sell one piece for N20, which amounts to N400. The retailers make N220 profit on N180 investment.
Also, the survey further revealed that a carton of eggs that contains 30 pieces is supplied to the retailers at N1,800. The retailers sell one egg for N100, which amounts to N3,000 for the carton. The retailers make N1,200 profit on N1,800 investment.
The number of commodities being sold at an abnormal profit can keep increasing and increasing as the survey continues. The government must intervene in a situation of rising commodity prices resulting from retailers’ greed. The Nigerian market system has completely failed and the government must intervene.
The Nigerian government cannot assume ignorance of the prevailing rising commodity prices in the market following the greed of the retailers. The question many Nigerians are asking is: who should be blamed for the rising commodity prices in Nigeria. Is it the government or the sellers?
The Nigerian government should be blamed for its inability to use direct control measures to reduce rising commodity prices in the market. The Nigerian government has the capacity to use direct control measures to bring down prices in the market, but it has not utilised it.
It is high time the Nigerian government rose to the challenges confronting the country to make life more meaningful for the common man in the country. The Nigerian government should mobilise the appropriate personnel to effect direct control measures in bringing down commodity prices in the market.
Felix Ashakah is an economics lecturer at Western Delta University, Oghara
