According to the selected food price watch data released by the National Bureau of Statistics (NBS) for February 2021, major consumer staples showed significant increases between February 2020 (when the land border was still closed) and February 2021 (when the land borders had been partially reopened).
The steep price increases across the food items are also consistent with the increase in food inflation from 14.90% in February 2020 to 21.79% in February 2021. Specifically, a common tuber vegetable, Yam, increased significantly by 128.30% y/y. Also, rice which is the most widely consumed food staple showed a substantial increase in the two variants; local sold loose (up 22.15% y/y) and imported high quality sold loose (up 29.67% y/y). However, we also note a significant decrease in some food items such as sweet potato (down 34.42% y/y).
The rise in food prices which has been the major driver of the rising inflationary pressure is due to supply chain disruptions, incessant attacks on farmers by herdsmen in the food processing regions and high input costs such as fertilizers. In the last MPC meeting held last week, the apex bank noted its interventions to boost food production, particularly through its various agricultural programmes.
However, structural issues around the food supply chain if not resolved would continue to outweigh the expected results from these interventions. Recently, a 6-day strike action embarked upon by the Northern cattle and foodstuff dealers under the auspices of the Amalgamated Union of Food and Cattle Dealers of Nigeria (AFUCDN) led to a spike in prices of food items within the affected period.
Considering the fact that we are approaching the planting season amidst unresolved insecurity challenges and expectations of flood in many areas of the country, we expect food prices to continue to rise. Besides, the impact of the devaluation of the naira will put further pressure on imported food inflation. The government needs to put food security at the forefront to ensure all measures are taken to avert a food crisis.
