Rising Prices Of Bread, Meat, Yam Raise Inflation After 8-month Decline

The sustained high cost of bread, meat, yam and other nutrition sources kept food inflation up for two consecutive months to end 2021. The prices of food were particularly highest in Rivers, Cross River, and Akwa Ibom states on a month-on-month basis.

On the back of the rise in food prices, the consumer price index, which measures the rate of increase in the price of goods and services, increased to 15.63 percent in December 2021.

The rate is 0.23 per cent points higher than the 15.40 percent recorded in November 2021.

This implies that prices showed an uptick in December 2021 — but dropped when compared to the corresponding period of 2020.

The revelation was made in the latest report by the National Bureau of Statistics yesterday.

This is the first increase after recording consecutive drops since April 2021, amid a surge in food prices.

On month-on-month basis, December 2021 food inflation was highest in Cross River (4.09 per cent), Akwa Ibom (3.88 per cent) and River (3.79 per cent), while Nasarawa (0.21 per cent), Jigawa (0.39 per cent) recorded the slowest rise in inflation on month-on-month with Kaduna recording price deflation or negative inflation (general decrease in the price level of food or a negative food inflation rate).

However, in December 2021, food inflation on a year-on-year basis was highest in Kogi (22.82 per cent), Enugu (20.65 per cent) and Lagos (20.27 per cent), while Edo (13.24 per cent), Kaduna (13.53 per cent) and Sokoto (14.82 per cent) recorded the slowest rise,” the report adds.

In December 2021, all items inflation on year- on- year basis was highest in Ebonyi (18.71 per cent), Kogi (18.37 per cent) and Bauchi (17.81 per cent), while Kwara (12.32 per cent), Edo (13.46 per cent) and Cross River (13.93 per cent) recorded the slowest rise in headline Year on Year inflation.

Analysts ascribe the rise to supply chain bottlenecks occasioned by insecurity in parts of the country. Others point at seasonal hue of the development as the states most affected are predominantly Christian, where prices of food items rise during the festive season.

According to the report, food inflation also increased to 17.37 percent in December from 17.21 percent in November. NBS said the rise in the food sub-index was caused by increases in the price of bread and cereals, food product, meat, fish, potatoes, yam and other tubers, soft drinks and fruits, many of which are imported.

Meanwhile, core inflation, which excludes the prices of agricultural items, increased to 13.87 percent in December 2021 compared to 13.85 percent in November 2021.

The report noted that the highest increases were recorded in prices of gas, liquid fuel, wine, actual and imputed rentals for housing, narcotics, tobacco, garments, shoes and other footwear and clothing materials, other articles of clothing and clothing accessories.

It is worthy of note that the prices of food globally had taken a steep northward trajectory between 2020 and 2021, which also impacted the local prices of food items.

The FAO Food Price Index (FFPI) averaged 133.7 points in December 2021, down 1.2 points (0.9 percent) from November, but still up 25.1 points (23.1 percent) from December 2020. Except for dairy, the values of all sub-indices encompassed by the FFPI registered monthly declines, with international prices of vegetable oils and sugar falling significantly month-on-month. For 2021 as whole, the FFPI averaged 125.7 points, as much as 27.6 points (28.1 percent) above the previous year with all sub-indices averaging sharply higher than in the previous year.

The FAO Cereal Price Index averaged 140.5 points in December, down 0.9 points (0.6 percent) from November. Wheat export prices fell in December, amid improved supplies following harvests in the southern hemisphere and slowing demand. However, maize prices were firmer, underpinned by strong demand and concerns over persistent dryness in Brazil. While sorghum prices also rose, partly influenced by maize markets, barley quotations eased slightly. International rice prices also softened in December, as demand relapsed, and currencies weakened against the US dollar in various major suppliers. For 2021 as a whole, the FAO Cereal Price Index averaged 131.2 points, up 28.0 points (27.2 percent) from 2020 and the highest annual average registered since 2012.

In 2021, maize and wheat prices were 44.1 and 31.3 percent higher than their respective 2020 averages, mostly on strong demand and tighter supplies, especially among major wheat exporters. Rice was the sole major cereal to register a decline in prices in 2021, with quotations falling on average 4.0 percent below 2020 levels. The weakness reflected ample exportable availabilities of rice, which heightened competition among suppliers and led them to seek to counter the impact of high freight costs and container shortages on demand by lowering prices.

The FAO Vegetable Oil Price Index averaged 178.5 points in December, shedding 6.1 points (or 3.3 percent) from recent record highs. The decline was driven by weakening palm and sunflower oil prices, while soy and rapeseed oil values remained virtually unchanged month-on-month. International palm oil prices fell in December, primarily reflecting subdued global import demand amid concerns over the impact of rising COVID-19 cases. Meanwhile, international sunflower oil quotations were also weaker, reflecting demand rationing. By contrast, world soy and rapeseed oil prices maintained their strength, largely underpinned by, respectively, firm import demand primarily from India and protracted global supply tightness. For 2021 as a whole, the FAO Vegetable Oil Price Index averaged 164.8 points, up as much as 65.4 points (or 65.8 percent) from 2020 and marking an all-time annual high.

The FAO Dairy Price Index averaged 128.2 points in December, up 2.3 points (1.8 percent) from November and 19.0 points (17.4 percent) above its December 2020 value. In December, international quotations for butter and milk powders continued to increase, underpinned by high global import demand, coupled with tight export supplies, resulting from lower milk production in Western Europe and Oceania.

Meat Price Index averaged 111.3 points in December, marginally changed from November and 16.5 points (17.4 percent) above its year-earlier value. In December, poultry prices fell, primarily weighed by increased global exportable supplies, while ovine prices declined on increased supplies from Oceania.

The FAO Sugar Price Index averaged 116.4 points in December, down 3.8 points (3.1 percent) from November and a five-month low. The December decline reflected concerns over the impact of the Omicron COVID-19 variant on global demand for sugar following the resumption of containment measures in many regions. The weakening of the Brazilian Real against the US dollar and lower ethanol prices also contributed to lowering world sugar prices in December. For the year as a whole, the FAO Sugar Price Index averaged 109.3 points, up 29.8 points (or 37.5 percent) from 2020 and the highest since 2016.