Economy
How Rising Food Prices Pushed Inflation to 49-Month High of 18.17%
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.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange weakened by 0.22 per cent on Tuesday, April 28, with the market capitalisation down by N4.8 billion to N2.420 trillion from N2.425 trillion, and the NASD Unlisted Security Index (NSI) down by 9.01 points to 4,044.96 points from 4,053.97 points.
During the session, the price of Central Securities Clearing System (CSCS) Plc went down by N1.82 to N767.05 per share from N78.87 per share, while FrieslandCampina Wamco Nigeria Plc appreciated by N1.90 to N100.00 per unit from N98.10 per unit.
According to data, the value of trades increased by 265.7 per cent to N27.1 million from N7.4 million units, and the volume of transactions surged by 305.2 per cent to 1.3 million units from 319,831 units, while the number of deals decreased by 6.9 per cent to 27 deals from 29 deals.
Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with the sale of 3.4 billion units valued at N8.4 billion, followed by CSCS Plc with 59.8 million units exchanged for N4.0 billion, and Okitipupa Plc with 27.8 million units traded for N1.9 billion.
GNI Plc also finished as the most traded stock by volume on a year-to-date basis, with a turnover of 3.4 billion units worth N8.4 billion, trailed by Resourcery Plc with 1.1 billion units transacted for N415.7 million, and Infrastructure Guarantee Credit Plc with 400 million units sold for N1.2 billion.
By Adedapo Adesanya
Pressure is beginning to mount on the Nigerian Naira in the different segments of the foreign exchange (FX) market despite an oil windfall triggered by the Middle East crisis.
On Monday, April 27, the domestic currency further weakened against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) by N16.47 or 1.2 per cent to N1,380.71/$1 from the previous day’s N1,364.24/$1.
It was not different against the Pound Sterling in the same market window, as it lost N16.04 to trade at N1,863.76/£1 versus Monday’s closing rate of N1,847.72/£1, and against the Euro, it slipped by N12.72 to close at N1,615.01/€1 versus N1,602.29/€1.
The Naira also depreciated against the Dollar at the black market yesterday by N5 to quote at N1,390/$1 compared with the previous price of N1,385, and at the GTBank forex counter, it further crashed by N9 to settle at N1,379/$1 compared with the preceding session’s N1,370/$1.
The continued decline of the Naira comes as traders increasingly seek other safe-haven currencies amid continued global disruptions.
The benefit awash in the global market is making foreign portfolio investors stay short in Nigerian markets. Despite this, the daily FX publication released showed that interbank turnover rose to $98.829 million across 78 deals, up from $76.65 million.
Meanwhile, the cryptocurrency market remained cautious, with Bitcoin (BTC) trading at $77,216.66 despite surging oil prices and geopolitical tensions over a potential extended US naval blockade of the Strait of Hormuz.
Analysts say the supply overhang has finally dried up, and the sellers who were spooked by macro shifts or quantum fears have already exited, leaving the market much thinner on the sell-side.
Investors will await decisions made by central banks this week. The US Federal Reserve will announce its rate decision later on Wednesday, while the European Central Bank (ECB) follows on Thursday.
Ethereum (ETH) gained 1.5 per cent to trade at $2,324.59, Dogecoin (DOGE) chalked up 1.4 per cent to sell for $0.1016, Solana (SOL) appreciated by 0.6 per cent to $84.85, Cardano (ADA) grew by 0.5 per cent to $0.2483, and Binance Coin (BNB) advanced by 0.2 per cent to $627.15.
However, TRON (TRX) depreciated by 0.6 per cent to $0.3224, and Ripple (XRP) lost 0.03 per cent to sell at $1.39, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) were unchanged at $1.00 each.
By Adedapo Adesanya
Oil was up by nearly 3 per cent on Tuesday as persistent worries about supply constraints from the closed Strait of Hormuz continued, with Brent futures for June rising by $3.03 or 2.8 per cent to $111.26 a barrel, and the US West Texas Intermediate (WTI) crude futures growing by $3.56 or 3.7 per cent to $99.93 a barrel.
An earlier round of negotiations between the United States and Iran collapsed last week after face-to-face talks failed.
Ship-tracking data showed significant disruptions in the region, with six Iranian oil tankers forced to turn back due to the US blockade, but some traffic is still moving.
Prices trimmed some of the advances after the United Arab Emirates (UAE), the fourth-largest producer in the Organisation of the Petroleum Exporting Countries (OPEC), said on Tuesday it would exit the group on this Friday, May 1, 2026.
This dealt a blow to the oil-exporting group and its de facto leader, Saudi Arabia.
The UAE could quickly add between 1 million and 1.5 million barrels per day of output. However, with the Strait of Hormuz effectively closed, analysts said that there’s nowhere for that supply to go.
The UAE joined OPEC in 1967, but tension with Saudi Arabia over production quotas has been building for years.
Under the OPEC+ deal, the country has been held to roughly 3 million barrels per day while sitting on capacity above 4 million. It has been pushing toward 5 million barrels per day by 2027, and that target is hard to achieve with quotas built around someone else’s view of the market.
The war in Yemen broke whatever was left of diplomatic patience.
President Donald Trump said he was unhappy with the latest Iranian proposal to end the war. The proposal would avoid addressing the nuclear programme until hostilities cease and Gulf shipping disputes are resolved.
The Idemitsu Maru, a Panama-flagged tanker carrying 2 million barrels of Saudi oil, and an LNG tanker managed by the Abu Dhabi National Oil Company (ADNOC) crossed the Strait on Tuesday, shipping data showed.
Vortexa data showed that the amount of crude oil held around the world on tankers that have been stationary for at least seven days rose to 153.11 million barrels as of April 24.
The American Petroleum Institute (API) estimated that crude oil inventories in the United States fell by 1.79 million barrels in the week ending April 24. The official data from the US Energy Information Administration (EIA) will be released later on Wednesday.
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