Nigeria’s inflation rate rose above 10 percent in February for the first time since December 2012 as food costs soared increasing the pressure points on the already tapped out Nigerian consumer.
Inflation accelerated from 9.6 percent in January, the National Bureau of Statistics (NBS) said in a report published on Tuesday.
Food prices gained 11.4 percent in February from a year ago, up from 10.6 percent in the previous month.
The Central Bank’s pegging of the currency in the past year has failed to stem inflation, which has been above the 6 percent to 9 percent target band since May.
Policy makers lowered the benchmark interest rate by 2 percentage points to 11 percent in November to help support an economy hit by plunging oil prices.
The bank will make its next rate decision on March 22.
BusinessDay checks reveal that prices of household and perishable goods as well as luxury items are all going up despite the best intentions of economic managers touting the current Foreign Exchange (FX) policy.
“The Forex issue is the big elephant in the room and a big challenge,” said George Nasser, Vice President Procter and Gamble Nigeria.
Consumer prices have spiked arbitrarily across the food and non-food baskets.
Checks show that a bag of imported 50kg rice is now N13, 500 as against N12, 000.
A tin a Titus sardines now goes for N165 instead of N150.
A can of Heinz baked beans which previously sold for N199 is now N210.
Also, the price of a Samsung Galaxy A5 (A500) smartphone which was sold at N61, 000 is now N86, 000 and the Samsung Galaxy A8 (A800) which was N90, 000 now goes for N127, 000.
“Nigeria is now among the 10 highest inflation countries in SSA,” Bismarck Rewane, CEO of consulting firm Financial Derivatives Company (FDC) said.
“Cost pressures will persist with forex scarcity and naira weakness.”
Some locally manufactured goods have not been spared, as they have also witnessed a massive increase.
A small carton of Indomie which goes for N1, 300, increased by 38.5 percent and now sells for N1, 800.
A 50kg bag of garri now goes for N9, 000 against N3, 500 which is a 157 percent increase, while a 50kg bag of maize increased by 134.3 percent to N8, 200 from N3, 500 in the last month.
In addition, a 900g pack of Peak powdered milk now goes for N2,140 against N2, 000, a loaf of sliced bread N270 instead of N220 and a bag of sachet water rose by 114.3 percent to sell for N150 from N70.
The naira is trading at N320 per dollar in the parallel or black market, about 60 percent above the Central Bank’s official rate.
The shortage of dollars means a lot of manufacturers have been pushed into a blended funds forex market (in essence sourcing from a combination of the official and parallel markets.)
BusinessDay findings revealed a mixed grill of feelings as many consumers within Lagos metropolis struggle to make ends meet due prices increase.
Consumers interviewed by our reporter expressed frustration as a result of escalating increase in the prices of most food items, as they now live under difficult circumstances owing to the hike in prices of essential commodities.
Madam Osho, a housewife who resides in Agege area of Lagos State said she and her family have been hit hard by the rising cost of living.
“Before now I could make a good stew with tomatoes and pepper worth N250 or N300 but now I must buy between N900 and N1,000 worth of products and with that, I can only manage to make a pot of stew that would last for three days. It has never been this costly before,” she lamented.
The supply of these two major food items, which happen to be part of every delicacy in an average home is in short supply, especially in Lagos, where a handful is sold at a very costly price.
This therefore implies that the fall in the value f the naira has not only caused scarcity of certain commodities but has also affected the prices of these commodities in the market.
As at December 2015, the prices of foods stuff from Mile 12 market where trailers from the northern part of the country come to off load various agricultural products were fairly affordable compared to now.
Rewane of the FDC says the consumer resistance to price hikes is leading to substituting for alternatives and outright boycotts.
Data from the FDC shows that the beer market growth has declined to 0.7 percent in 2016 while the Malt market has also suffered a more severe contraction of 12 percent.
Fast food chains are reporting 20 percent cuts in sales nationwide, 30 percent in Abuja and 15 percent in Lagos.
Channel checks also show that KFC an international fast food franchise has reportedly stopped selling French fries because it cannot import potatoes.
Rewane forecasts a bleak outlook for consumer disposable income with lifestyle adjustments becoming the norm and consumers focused on necessities which are price inelastic.
“Retail activities, which slowed in Q1, will continue,” Rewane said.
“Retailers are pushing up prices towards resistance level. More restaurants will offer limited menus.”
CHINWE AGBEZE
