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Economy

How Rising Food Prices Pushed Inflation to 49-Month High of 18.17%

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By Adedapo Adesanya

On Thursday, the National Bureau of Statistics (NBS) announced that inflation in Nigeria surged to a 49-month high as it rose to 18.17 per cent from 17.33 per cent recorded in February 2021.

The last time Nigeria recorded an inflation rate higher than 18.17 per cent was in January 2017, when headline inflation stood at 18.72 per cent.

In the report released by the NBS yesterday, the inflation numbers for last month were 0.82 per cent higher than the February figures.

On a month-on-month basis, the headline index increased by 1.56 per cent in March 2021, this is 0.02 per cent points higher than the rate recorded in February 2021 (1.54 per cent).

From the NBS report, it was clear that the inflation worsened last month as a result of rising food prices in the country and this can be attributed to insecurities in the country.

Why food prices are high

Many farmers have been unable to go to their farms because of fears of being killed or if lucky, just abducted with a huge amount of money paid for their freedom.

For those who managed to be on their farms, they have to pay levies to bandits for planting and harvesting and when the farm products are to be transported to the market, another huddle is there waiting for them.

Several transporters have complained bitterly of how they pay to security officials who mount roadblocks and in some cases, there is the fear of being kidnapped by hoodlums on the road.

By the time the products get to market, all these costs are factored into them while the sellers will have to pass on the extra cost on the consumer, leaving the prices very high for most consumers to purchase because of the harsh economic situation in the country.

Food index figures

According to the stats office on Thursday, last month, the country’s food inflation jumped to 22.95 per cent from 21.79 per cent recorded in the previous month.

On a month-on-month basis, the food sub-index increased by 1.9 per cent in March 2021, up by 0.01 per cent points from 1.89 per cent recorded in February 2021.

The stats office explained in the report that the rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam, and other tubers, meat, vegetables, fish, oils and fats, and fruits.

Also, the average annual rate of change of the food sub-index for the 12-month period ending March 2021 over the previous 12-month average was 17.93 per cent representing 0.68 per cent points from the average annual rate of change recorded in February 2021 (17.25 per cent).

Meanwhile, the urban inflation rate rose to 18.76 per cent (year-on-year) in March 2021 from 17.92 per cent recorded in February 2021, while the rural inflation rate jumped to 17.6 per cent in March 2021 from 16.77 per cent in February 2021.

The ”All items less farm produce” or core inflation, which excludes the prices of volatile agricultural produce rose to 12.67 per cent in March 2021, up by 0.29 per cent when compared with 12.38 per cent recorded in the preceding month.

On a month-on-month basis, the core sub-index increased by 1.06 per cent in the period under review. This was down by 0.15 per cent when compared with 1.21 per cent recorded in February 2021.

The average 12-month annual rate of change of the index was 10.01 per cent for the 12-month period ending March 2021; this is 0.76 per cent points lower than the 10.77 per cent recorded in February 2021.

NBS revealed that the highest increases were recorded in prices of passenger transport by air, medical services, miscellaneous services relating to the dwelling, passenger transport by road, hospital services, passenger transport by road.

Others were pharmaceutical products, paramedical services, vehicle spare parts, dental services, motor cars, maintenance and repair of personal transport equipment, and hairdressing salons and personal grooming establishment.

Kogi State recorded the highest inflation rate by states in March 2021 with a rise of 24.51 per cent while Cross River (14.45 per cent) recorded the slowest rise in headline year-on-year inflation.

The Yahaya Bello governed state also recorded the highest in terms of food inflation, on a year on year basis at 29.71 per cent while Bauchi State (18.61 per cent) recorded the slowest rise .in year on year inflation.

Analysts have noted that Nigerians will now have to battle with a worsening purchasing power as prices of goods and services continue to rise, meaning more poverty and an increased economic downturn.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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