Nigeria’s food inflation declined to 1.40 percent month-on-month (MoM) in July, from 1.57 percent recorded in the previous month (June), indicating a drop in the composite food index to 12.85 percent in July compared with 12.98 percent in June.
Data compiled by National Bureau of Statistics (NBS) show that this represents the first decline in m-o-m food inflation since February 2018, and the tenth consecutive decline in year-on-year food inflation since September 2017.
However, there was an increase in prices of potatoes, yam and other tubers, vegetables, bread and cereals, fish, oils and fat, and fruits.
According to Financial Derivatives Company (FDC), “During the month of July, there were some noticeable price moderating factors, which include relative improvement in power supply from 3,588MWh/h in June to 3,619MWh/h, decline in the average wholesale diesel prices from N217per litre in June to N207per litre in July.”
Also, “reduction in naira liquidity as a result of the delay in Federation Account Allocation Committee (FAAC) disbursement and the CBN’s mopping up exercise, marginal appreciation in the parallel market exchange rate from N362 per dollar at the end of June to N360 per dollar,” FDC stated in a report.
Food inflation on a year-on-year basis was highest in Abuja (15.85%), Bayelsa (15.75%) and Imo (15.46%), while Plateau (9.40%), Bauchi (10.44%) and Kano (10.50%) recorded the slowest rise in food inflation in July 2018.
On m-o-m basis however, July 2018 food inflation was highest in Kwara (4.57%), Kaduna (3.99%) and Imo (3.44%), while Ogun (0.16%) and Osun (0.38%) recorded the slowest rise.
Kwara, Kaduna and Imo states recorded the highest food inflation due to high increase in their prices of food caused by high transportation cost owing to bad road as well as other factors.
“No state in Nigeria produces up to 90 percent of what they eat and so a lot of food comes from other states as well even the best producing states. However, when production is low, they know how to truck in more food from other states.
“Most items been trucked in have elements of inflation due to high transportation cost resulting from bad roads. In addition, they suffer losses in the process because of lack of preservation and poor handling practices,” Emmanuel Ijewere, vice president, Nigeria AgricBusiness Group (NABG) told BusinessDay.
“However, the states with the lowest rate would behave such that, these states produce a lot of their food and they have very hardworking farmers that is in Ogun and Osun state,” Ijewere said.
Kogi recorded food price deflation or negative inflation (general decrease in the general price level of goods and services or a negative inflation rate) in July 2018.
“Kogi is the centre of production and people do not have to travel a long distance to bring their food in there. Also Kogi state people are very industrious when it comes to their farming” Ijewere concluded.
The average annual rate of change of the Food sub-index for the twelve-month period ending July 2018 over the previous twelve-month average was 17.10 percent, 0.65 percent points from the average annual rate of change recorded in June (17.75) percent.
