Imported food inflation soars to 36.38% in June as naira weakens — NBS report

By Esther Agbo

Nigeria’s imported food inflation surged to 36.38 percent in June 2024, up from 34.83 percent in May, marking a 1.55 percentage point increase, according to the Consumer Price Index (CPI) data from the National Bureau of Statistics (NBS). The average price index for imported food rose to 806.0 in June 2024 from 591.0 in June 2023.

This significant rise in imported food inflation, from 19.10per cent in June 2023, is attributed to the naira’s depreciation following the Central Bank of Nigeria’s (CBN) forex market unification in June 2023, aimed at enhancing market transparency and efficiency. This policy led to a sharp decline in the naira’s value.

NBS data from January to June 2024 reveals a consistent increase in imported food costs. Starting at a high of 26.29per cent in January, the inflation rate climbed to 29.81per cent in February, 32.89per cent in March, 34.01per cent in April, 34.83per cent in May, and finally 36.38per cent in June, indicating a steady upward trend with some deceleration from March to May before rising again in June.

In June 2024, Nigeria’s overall inflation rate also increased, from 33.95per cent in May to 34.19 percent in June. This is 11.40 percentage points higher than the 22.79per cent recorded in June 2023. Month-on-month, headline inflation rose by 0.17 percentage points from May 2024’s 2.14 percent to 2.31 percent in June 2024. Imported food inflation at 36.38 percent outpaced the general inflation rate, with overall food inflation reaching 40.87 percent in June 2024, up from 40.66 percent in May.

Nigeria’s exchange rate depreciated by 1.3 percent in June 2024 to N1,503.3/$1, with the naira dropping 40 percent between December 2023 and June 2024. The Nigeria Customs Service exchange rate for import duties rose to N1,508/$1 in early July, the highest since March 2024 when the exchange rate for Customs import duties stood at N1,572/$.

This represents an increase of 15.62 percentage points from the 25.25 percent rate recorded in June 2023. On a month-to-month basis, the food inflation rate in June 2024 was 2.55 percent, up by 0.26 percentage points from the 2.28 percent rate in May 2024. The monthly rise in food inflation was attributed to higher prices for items like groundnut oil and palm oil.

This devaluation has raised the cost of goods priced in foreign currencies, directly impacting imported food prices. The Trade Union Congress (TUC) and the Minister of Information have suggested food importation as a temporary solution to rising prices, while President Bola Tinubu and other officials advocate for self-sufficiency and domestic production.

The International Monetary Fund (IMF) highlighted the food crisis in Nigeria and other sub-Saharan countries due to heavy reliance on imported foods. To combat food inflation, the federal government approved a 150-day duty-free period for importing maize, rice, and wheat.

Moreover, critics, including the President of the African Development Bank (AfDB) and the National President of the All Farmers Association of Nigeria (AFAN), argue that such policies undermine local agricultural production and call for more investment in local farming inputs to ensure sustainable food systems.