Nigeria’s food inflation rate hit an unprecedented 40 per cent in March 2024, exerting significant pressure on the purchasing power of the average Nigerian consumer, according to the latest figures released by the National Bureau of Statistics (NBS).
Economists and financial analysts warn that this sustained rise in staple food prices is likely to continue for several months before stabilising, further straining household budgets. The soaring food costs drove the headline inflation rate to 33.2 per cent in March, up from 31.7 per cent in February, an increase of 2.09 and 1.5 percentage points month-on-month, respectively.
However, analysts anticipate an even higher headline inflation rate of 34.6 per cent this month, representing a 2.4 percentage point monthly jump, due to the recent hike in electricity tariffs implemented by the Nigerian Electricity Regulatory Commission (NERC). Band A customers now face a tariff increase from N68 to N225 per kilowatt-hour.
CardinalStone Finance Limited, a Lagos-based investment house, stated, “The inflation outlook is biassed upward, a consequence of the recent implementation of new electricity tariffs.” Meanwhile, Alpha Morgan Capital predicted, “From our analysis, we project that inflation will further increase but at a continuously slower rate, tied primarily to recent monetary interventions by the Central Bank of Nigeria in mopping up excess liquidity and curbing volatile exchange rate movements.”
The persistent rise in inflation could spell trouble for small businesses, warned the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA). Director General Sola Obadimu commented, “Persistently rising inflation is bad for businesses as well as individuals. It erodes income in real terms and weakens purchasing power for both. The cost of doing business continues to grow, leading to higher costs of goods in a cyclical pattern.”
Dr. Femi Egbesola, President of the Association of Small Business Owners of Nigeria (ASBON), echoed these concerns, stating, “The new and rising inflation rate will continue to worsen the survival and growth of SMEs. It will squeeze out our meagre working capital and make us more vulnerable to extinction. More businesses will die off, leading to job losses, decreased access to funding, and increased insecurity as people seek alternative illegal means of survival.”
NBS data showed that on a year-on-year basis, the March 2024 headline inflation rate was 11.16 percentage points higher than the 22.04 per cent recorded in March 2023. Food inflation rose 15.56 percentage points to 40.01 per cent year-on-year, driven by increased prices for staples like garri, millet, yams, fish, oils, meat, fruits, and beverages.