Inflation: Addressing the factor of food crisis in CPI records
Inflationary pressure in the coming months have been projected by analysts to take grip on the Nigerian economy, as records for the third consecutive month keep soaring, hitting 16.82 per cent in April, 2022.
In its Consumer Price Index (CPI) released on Monday, May 16, 2022, the National Bureau of Statistics (NBS) disclosed that the headline inflation rate rose to 16.82 percent in April 2022, representing a 0.90 percent rise when compared to 15.92 per cent recorded in March 2022. The CPI rose to 16.82 per cent in April from 15.92 per cent in March. The NBS’ ‘Consumer Price Index April 2022’ report had read in part, “In April 2022, the consumer price index, which measures inflation increased to 16.82 per cent on a year-on-year basis.” According to the Bureau, increases were recorded in all COICOP divisions that yielded the headline index. Breakdown of the report had read partly: “On a month-on-month basis, the headline index increased to 1.76 percent in April 2022, this is a 0.02 percent rate higher than the rate recorded in March 2022 (1.74) percent. On a month-on-month (MoM) basis, the urban index rose to 1.78 per cent in April 2022, up by 0.02 from the rate recorded in March 2022 (1.76%), while the rural index also rose to 1.74 per cent in April 2022, up by 0.01 from the rate that was recorded in March 2022 (1.73%).”
The bureau also disclosed that the composite food index rose year-on-year (YoY) by 1.17 basis points to 18.37 per cent in April 2022 from 17.20 per cent in March 2022. This was due to the rise in the food index following the increases in prices of bread and cereals, food products, potatoes, yam, and other tubers, wine, fish, meat, and oils. “In April 2022, the CPI which measures inflation increased to 16.82 per cent on a Year-on-Year (YoY) basis. This is 1.3 percentage points lower compared to the rate recorded in April 2021 (18.12%),” the report read.
The figures of the NBS appear to defy the International Monetary Fund’s (IMF) projection, which projected that Nigeria’s Consumer Price Index would hit 16.1 per cent in 2022. In a tabular illustration, the IMF in its ‘Regional Economic Outlook for Sub-Saharan Africa,’ which was published on its website, had given a milder projection which economic realities in Nigeria have defied. The latest figures by the NBS shows inflation rate in April is the highest in the country since August 2021 when the record stood at 17.01 per cent.The reflections of the records reveal erosion of purchasing power with the weakening of the Country’s currency, further worsening poverty records among citizens. Inflationary pressure have been projected by analysts to soar in the coming months with such strains as rising insecurity, negatively impacting on food production and distribution across the Country. Also, effects of the rainy season and those of crude oil price on transportation cost have been noted to bear their impacts. As the gaps of food demand-supply continue to soar, it is noteworthy that impacts on the economy would negatively be undesirable. Although hike in food prices is not only peculiar to Nigeria but have been a subject of note as a global trend worsened by the Russia-Ukraine conflicts, its hold on Nigeria transcends global flashlights.
Sustained pressure on food prices have been noted to constitute significant grip in soaring inflation records, recently. In the World Economic Outlook report, the IMF had warned about the effects of food inflation. The report had read in part: “In sub-Saharan Africa, food prices are also the most important channel of transmission, although in slightly different ways. Wheat is a less important part of the diet, but food, in general, is a larger share of consumption. Higher food prices will hurt consumers’ purchasing power, particularly among low- income households, and weigh on domestic demand. Social and political turmoil, most notably in West Africa, also weighs on the outlook.”
The World Bank recently had said COVID-19 pandemic-induced inflation pushed about 23 million Nigerians into a food crisis in 2021, especially in regions engulfed in conflict. It added that the war-driven disruptions in the food trade, higher food price inflation, and higher costs of administering food assistance efforts are likely to make more people food insecure.
The World Bank in another report had observed that import restrictions and non-flexible exchange rate management of the Central Bank of Nigeria constitute major driving forces for food inflation in Nigeria. The report had read in part: “Rising food prices are the underlying factor behind the surge of headline inflation in Nigeria. Food prices have increased due to import restrictions and a nonflexible exchange rate management. The current regime is keeping the official exchange rate of the naira artificially strong while the naira has weakened significantly on the parallel market. Additionally, the central bank has restricted importers’ access to foreign currency for 45 products and has reduced the supply to other importers.”
Impacts of food crisis may portend far reaching economic impacts than the government of the Country may foresee. The outcry over addressing the clustering of defective forces informing the shortfalls in food production have not been yielded to, with responsive firmness. Most recently, among these forces, has been the scourge of insecurity which has continuously been recording the displacement of farmers from their settlements. Attacks on farmlands and the displacement of farming communities have seen the desertion of farmlands taking toll across the Country. The resultant effects have been continuous shortage in food production. The impacts of insecurity on food supply have also particularly compounded the strains on food availability, hence, leaving behind a food demand-supply gap pushing the Country to the end of food crisis.
Although global trend as the pandemic, issues surrounding Russian-Ukraine war, and it’s associated global effects, have been noted to have their impacts, it is resounding that local factors within the Nigerian domain are much more pronounced than these external factors. Closure of borders, deficiencies in fiscal and monetary policies, conflicts and insecurity, political factors among others, bear stronger blows worsening inflation in the Country, and more particularly on food crisis which has been noted to bear a strong force in the CPI profile of the Country.
It is only pertinent that the Government of the day turn pressing attention to addressing the strains surrounding the factors which have formed forces of depression on the economy, particularly as it concerns those informing the worsening profile of food crisis in the Country. This is pertinent to salvage the Country’s economy from drenching deeper into the mire of crises.
