Imported food prices skyrocket as inflation reaches 33.69% – NBS report

Nigeria has witnessed a significant rise in the cost of imported food commodities, which jumped by 34 percent between April 2023 and April 2024. This surge, from 32 percent in March 2024, represents a 200-basis-point increase, as revealed in the Consumer Price Index report by the National Bureau of Statistics on Wednesday.

Despite the Federal Government’s efforts to curb food imports to tackle high food costs and economic hardships, internal and external factors have exacerbated the situation. The lingering effects of the Covid-19 pandemic, the Russia-Ukraine war, rising global oil prices, and the depreciation of the local currency have all intensified Nigeria’s dependence on imported food.

April marked the 16th consecutive month of rising inflation in Nigeria, driven by a threefold increase in electricity tariffs and higher transportation costs. The headline inflation rate saw a month-over-month rise of 0.49 percentage points, falling just below the 34.2 percent median estimate by eight Bloomberg economists. Compared to April 2023, the inflation rate in April 2024 was 11.47 percentage points higher, standing at 22.22 percent the previous year.

Financial Derivatives highlighted that the national data did not account for petrol scarcity, which will be reflected in next month’s report. The persistent inflation suggests another potential interest-rate hike by the central bank’s monetary policy committee, which has already raised borrowing costs to control inflation and support the naira. Core inflation, which excludes farm produce and energy costs, increased to 26.8 percent from 25.9 percent, while food price growth rose to 40.5 percent from 40 percent in April.

Month-over-month, April 2024’s inflation rate was 2.29 percent, down from 3.02 percent in March 2024, indicating a slower rate of price increases. The April 2024 headline inflation rate rose to 33.69 percent from March’s 33.20 percent, marking a 0.49 percentage point increase. Year-over-year, April 2024’s headline inflation was 11.47 percentage points higher than April 2023.

Food inflation reached 40.53 percent year-over-year, significantly up from 24.61 percent in April 2023. The rise in food inflation is due to higher prices for items like millet flour, garri, bread, prepacked wheat flour, and various yams.

Read also:

• 
  Nigeria takes bold step to protect domestic workers as bill advances
• 
  FG, Benue partner to transform livestock sector, unlock $74bn growth potential
• 
  NDDC empowers 300 Niger Delta rice farmers with N200,000 starter packs
• 
  UKEF is Empowering Women-Led SMEs to Thrive in Global Trade
• 
  SMEDAN hosts town hall to guide SMEs on tax reforms
• 
  TEF entrepreneurs generate $4.2 billion, create 1.5 million jobs in Africa

For the year ending April 2024, the average annual food inflation rate was 32.74 percent, an increase of 9.52 percentage points over the 23.22 percent recorded in April 2023. Month-over-month, April 2024’s food inflation rate was 2.50 percent, down from 3.62 percent in March 2024, showing a slower rate of food price increases.

Kogi state remained the most expensive, with an all-items inflation rate of 40.84 percent and food inflation at 48.62 percent. Kwara state moved to second place with a food inflation rate of 46.73 percent. Ondo, Osun, and Akwa-Ibom had food inflation rates of 45.87, 45.62, and 45.09 percent respectively. Edo state recorded food inflation at 44.59 percent and all-items inflation at 32.72 percent.

Abia and Rivers states reported all-items inflation rates exceeding 35 percent, mainly due to food price hikes, with food inflation averaging 44.53 percent. Oyo saw a significant rise to 43.53 percent in food inflation, while Ebonyi joined the list with rates over 39.18 percent. Lagos state experienced the highest surge in both food and all-items inflation at 4.74 and 4.52 percent respectively.

Economists at Financial Derivatives expected the rate increase due to renewed pressure on the naira and rising food prices, exacerbated by seasonal factors. They suggested the Central Bank of Nigeria (CBN) might raise interest rates by 50 or 100 basis points, aligning with global trends.

The report indicated that headline inflation rose by 0.49 percent to 33.69 percent in April. The sustained price level increase was primarily due to a surge in the food basket, which rose by 0.52 percent to 40.53 percent, reflecting typical second-quarter planting season price spikes. Core inflation also increased, moving in tandem with food inflation to 26.84 percent from 25.90 percent, highlighting structural inflation issues.

Factors such as diesel prices and forex market alignment have impacted inflation expectations. Diesel prices fell by 29.41 percent to N1200/litre, and the exchange rate appreciated by 82 percent. Following the CBN’s policy implementation in February, there was a noticeable decline in month-over-month inflation by 10 basis points in March and 73 basis points in April. The CBN’s approach appears to be on track to control inflation, with the MPC likely to increase rates in line with global central banks.