More Pressures on Pockets as Food Inflation Surges to 40%

Nigeria has experienced an unprecedented food inflation rate of 40% in March 2024, leading to a rise in the overall headline inflation rate to 33.2%. This surge in food inflation is expected to continue for several months, putting more pressure on the purchasing power of the average Nigerian.

Economists and financial analysts attribute this rise in food inflation to the sustained increase in prices of staple food items in the market. They predict that the trend will persist before stabilizing, further straining the already burdened populace.

The recent hike in electricity tariffs is also expected to contribute to a wider headline inflationary rise in April 2024, with projections suggesting a 34.6% inflation rate for the month. Analysts point to the new electricity tariff, which has increased from N68 to N225 per kilowatt-hour for Band A customers, as a significant factor in this projection.

Analysts at Alpha Morgan Capital project that while inflation will continue to rise, the rate of increase will gradually slow down. They attribute this prediction to recent monetary interventions by the Central Bank of Nigeria aimed at mopping up excess liquidity and curbing volatile exchange rate movements.

However, the persistent rise in inflation is seen as detrimental to small businesses in the country, potentially leading to job losses and increased insecurity. The Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) emphasized that rising inflation erodes income and purchasing power, making planning difficult and breeding uncertainty.

The Association of Small Business Owners of Nigeria (ASBON) expressed concerns that the inflationary pressures will worsen the survival and growth of SMEs, leading to job losses, increased bad loans, and heightened insecurity. They anticipate a decline in standards of living and welfare for many Nigerians, as disposable income is eroded by inflation.

The National Bureau of Statistics (NBS) reported that the rise in food inflation was driven by increases in prices of various items such as garri, millet, yam tubers, dried fish, palm oil, beef, coconut, and beverages like Lipton tea and Bournvita. These price hikes have significantly impacted the cost of living for many Nigerians, particularly those with limited income.