Prices of food items in Nigeria remain high despite drop in inflation. Why?

By Anayo Ezugwu

DESPITE the drop in the Consumer Price Index, CPI, which measures inflation, from 15.3 percent in January to 14.33 percent in February, all major food sub-sector indexes are still on the increase. The food index increased by 17.59 percent (year-on-year) in February, down by 1.33 percent points from rate recorded in January 2018 (18.92) percent.

Figures from the National Bureau of Statistics, NBS, show that during the month, all major food sub-indexes increased. Price movements recorded by all items less farm produce or Core sub-index increased by 11.7 percent (year-on-year) in February 2018, down by 0.4 percent points from the rate recorded in January (12.10) percent.

The Composite Food Index rose by 17.59 percent in February 2018, caused by increases in prices of bread and cereals, milk, cheese and egg, potatoes, yam and other tubers, fish and vegetables, coffee, tea and cocoa.

On a month-on-month basis, the food sub-index increased by 0.85 percent in February 2018, down by 0.02 percent points from 0.87 percent recorded in January. The drop in headline inflation represents the 13th consecutive disinflation since January 2017 and is 0.8 percent points less than the rate recorded in January 2018 (15.13) percent. Increases were recorded in all COICOP divisions that yield the Headline Index.

On a month-on-month basis, the Headline index increased by 0.79 percent in February 2018, down by 0.01 percent points from the rate recorded in January. The percentage change in the average composite CPI for the twelve month period ending February 2018 over the average of the CPI for the previous twelve month period was 15.93 percent, showing 0.29 percent point lower from 16.22 percent recorded in January 2018.

During the month under review, the highest increases were seen in prices of fuel and lubricants for personal transport equipment, maintenance and repair of personal transport equipment, narcotics, vehicle spare parts, passenger transport by air, clearing, repair and hire of clothing, hospital services, domestic services and household services and glassware, tableware and household utensils.

The Urban inflation rate rose by 14.76 percent (year-on-year) in February 2018 from 15.56 percent recorded in January, while the Rural inflation rate also eased by 13.96 percent in February 2018 from 14.76 percent in January. On month-on-month basis, the urban index rose by 0.82 percent in February 2018, down by 0.01 from 0.83 percent recorded in January, while the rural index also rose by 0.77 percent in February 2018, showing no difference with the rate recorded in January.

The corresponding twelve month year-on-year average percentage change for the urban index is 16.24 percent in February 2018. This is less than 16.55 percent reported in January, while the corresponding rural inflation rate in February 2018 is 15.64 percent compared to 15.89 percent recorded in January.

The average annual rate of change of the Food sub-index for the twelve-month period ending February 2018 over the previous twelve month average was 19.52 percent, 0.1 percent points from the average annual rate of change recorded in January (19.62) percent.

The NBS did not state the reason for the hike in food prices but the Lagos Chamber of Commerce and Industry, LCCI, had stated that an estimated N200 billion planned investment in agro allied industry was put on hold in the country due to insecurity across several sections of the country.

Babatunde Ruwase, president of LCCI, during the Chamber’s ‘Security meets Business” Dialogue session, in Lagos, recently, explained that food security is at risk as agricultural production is threatened by security concerns, coupled with food inflation hovering at almost 20 percent as against 12 percent for core inflation.

– Mar. 17, 2018 @ 4:25 GMT |