IMF WARNS THAT HIGH FOOD INFLATION COULD WORSEN FOR NIGERIA, OTHERS
Rising food costs, according to the International Monetary Fund, is a major factor fueling inflation in Nigeria and other sub-Saharan African nations, and might exacerbate present economic downturns. This is according to an IMF blog post titled “Food Inflation in Sub-Saharan Africa.”
Food accounts for around 40% of the region’s consumption basket (a measure of goods and services used to measure consumer price index (CPI) inflation, according to the research.
What the IMF is saying
The IMF report stated that food inflation increased throughout 2019, on average, across 20 countries in the region where monthly food price data are available. After remaining stable around 9 percent (year over year) since the beginning of the pandemic, food inflation started to rise again from April this year to some 11 percent in October.
The report reads: “The outlook is highly uncertain. Food inflation and CPI inflation could moderate if commodity prices ease and pandemic-induced global supply chain disruptions resolve. However, high food inflation could persist if inflation expectations become de-anchored or supply chain disruptions continue. Regionwide, average inflation is expected to edge up in 2021 before easing next year depending on commodity prices and the resolution of supply-demand mismatches.”
According to the International Monetary Fund, a spike in food inflation would exacerbate the situation in the region’s distressed countries. It said, “Higher food inflation would worsen the situation for the countries already facing food insecurity and shortages with a disproportional impact on poor households. The number of undernourished persons in the region is projected to have increased by 20 percent in 2020, encompassing 264 million people.”
The global financial institution however advised on measures that countries could adopt in order to contain the rising food inflation. “Fighting food insecurity through targeted social assistance and insurance can help populations cope. Avoiding trade barriers and improving access to finance, seed stocks, insecticide, fertilizer, anti-erosion measures, and irrigation are also important,” it said.
What you should know
Nigeria’s food inflation rate surged to 21.79% in February 2021, which is the highest rate recorded in Nigeria since October 2005—exactly 15 years and 4 months ago.
According to the National Bureau of Statistics (NBS), food index increased by as much as 21.03% year-on-year in July 2021, adding that food inflation was driven largely by increases recorded in the prices of milk, cheese and eggs, coffee, tea and cocoa, vegetables, bread and cereals, soft drinks as well as meat.