How Nigeria’s inflation is driving food prices

Nigeria is facing a looming crisis as inflation rates surge to 15.9 percent in March, marking the highest level since October 2021. The impact of this economic turmoil is felt most prominently in the rising cost of food, with a recent report by SBM Intelligence revealing a staggering 7.3 percent increase in the average cost of preparing a pot of Jollof rice for a family of five. This surge from 8,000 Naira in the third quarter of the previous year to 8,600 Naira in the first quarter of 2022 has placed a significant financial strain on households across the nation. Ekemisit Effiong, the Head of Research at SBM Intelligence, shed light on the concerning economic trends during an interview with CNBC Africa. Effiong detailed the methodology behind the 'Jollof Index,' which serves as a proxy for measuring food inflation by tracking the cost of cooking a pot of Jollof rice, a staple dish in Nigeria. The index revealed a stark reality of inflationary pressures, painting a bleak picture of the economic landscape. Effiong highlighted the key factors driving this surge in food prices, pointing to geopolitical tensions that have led to volatility in commodity markets, particularly affecting fuel prices. The spike in diesel prices has cascading effects on food transportation costs, ultimately leading to elevated prices for essential food items. As the Russia-Ukraine crisis continues to unfold, experts warn of potential further impacts on global food prices, exacerbating the situation in Nigeria. The interview delved into the nuanced effects of consumer behavior on inflation, noting a trend of 'belt-tightening' among consumers in response to rising prices. Effiong emphasized that consumer choices are adapting to the economic pressures, with many opting for cheaper protein sources and reducing consumption of higher-priced items like beef and poultry. This evolving consumption pattern reflects the challenges faced by Nigerian households in coping with escalating food costs. Looking ahead, Effiong expressed concerns about the looming food crisis, with projections indicating a substantial number of Nigerians may experience food deficiency in the coming months. The World Bank's forecast of 19 to 24 million Nigerians facing severe food insecurity underscores the gravity of the situation. Effiong underscored the crucial role of government intervention in mitigating the impact on vulnerable populations, noting recent measures such as releasing strategic grain reserves to support those in need. In response to the crisis, Effiong proposed several actions the Nigerian authorities could take to alleviate the strain on food prices. Ramping up domestic production and exploring substitute products could help mitigate the impact of rising fertilizer prices on agricultural output. Importation policies and strategic interventions in the supply chain were also highlighted as potential strategies to stabilize prices and ensure food security for the population. As Nigeria grapples with skyrocketing inflation and surging food prices, the call for swift and decisive action from policymakers and stakeholders grows more urgent. The resilience of Nigerian households in the face of these economic challenges will depend heavily on the effectiveness of interventions aimed at safeguarding food access and affordability for all citizens.