Skyrocketing prices of food items and utilities have greatlyb eroded the average disposable and purchasing incomes of Nigerians. In this report, Assistant Business Editor, Chikodi Okereocha; Tofunmi Sanusi, Chidalu Ezekiel and Chibugo Oyeneze examine the underlying issues and effects on the avergae living standards
For many Nigerians, life has become a grind. The skyrocketing price of food items, including the cost of Liquefied Petroleum Gas (LPG), otherwise known as cooking gas, has thrown many Nigerians, especially those on the lower rung of the economic ladder and other vulnerable people into confusion. This has been further compounded as prices of most staple foods have been rising astronomically in recent times, making life unbearable for Nigerians.
A random market survey conducted across major markets by The Nation last week showed that a 50 kilogram (kg) of foreign rice, which sold for N25, 000 earlier the year now sells for N32, 000. The same size of the Nigerian local rice, which sold for N19, 000 between January and April, this year, now sells for between N25, 000 and 28, 000 depending on the brand.
If the price of rice is shocking, then the cost of beans, regarded as a meal for the lower class, is anything but disheartening. At present, a bag of 50kg beans “Oloyin” brand, which previously sold for N15, 000, rose to N36, 000 by the middle of the year; it sells for N47, 000.
Similarly, a ‘paint’ bucket of garri, which previously sold for about N400, is N1, 150. A bag of garri (containing 15 ‘paint’ buckets), which sold for N5, 000, later went up to N6, 000. At moment, the product goes as much as N14, 000. The same bag of garri (containing 18 paints) is sold for N12, 000.
By the middle of this year, it was N15, 000. Currently, it is sold for about N16, 000. A ‘paint’ bucket of garri is sold for between N950 and N1, 000. It was a slight decrease from between N1, 300 and N1400 it sold about three months ago. It was about N400-N500 before the outbreak of COVID-19 last year.
Early this year, one litre (or bottle) of palm oil was N400 while five litters was N2, 000. By mid-year, 1ltr of palm oil went up to N600; 5ltrs was N2, 000. And as at September, 1ltr and five litres of palm oil had gone up to N700 and N3, 500. A bottle of palm oil, which sold for between N250 and N300, is N800. A bag of onions is N12, 000, as against N7, 500 it sold in March, this year.
Also, a crate of egg, which cost between N800 and N1, 000 early this year, has gone up to N1, 200 – N1, 500 mid-year, before hitting N1, 700. Those who prefer fried egg with boiled yam for breakfast are also agonising over the sudden jump in the price of yam. A tuber of yam, which cost N400 or N500, goes for between N800 and N1, 000, depending on the size.
Combining the menu with tea is a luxury. A small sachet or economy pack of almost all brands of milk, which sold for N40 or N50, is sold for N60 or N70. Prices of bread and other confectionaries have also gone beyond the reach of the common man. For instance, a loaf of bread, which cost between N350 and N400 a few months ago, now goes for about N650 or more, depending on the size.
As if this is not enough heartache for consumers, the quantity of the loaf has been decreasing and can barely feed a family of four. Some Nigerians who spoke with The Nation blamed the high cost of baking materials such as sugar, flour, butter, and yeast for the sudden rise in prices of bread and other confectionaries.
For instance, the Chief Executive Officer (CEO) of Onart Concepts, which cake-making arm trades under the brand name ‘Onart Cakes, Mrs. Ono-Asi Bassey Akpanika, lamented the prevailing high cost of critical inputs for bread and other baked products.
“The price of bread and other baked products is on the high side because of the high cost operating environment induced by rising cost of critical inputs; the volume of demand has decreased. Bakers now try to come together to purchase ingredients in bulk, to try and reduce cost in some way,” Ono-Asi told The Nation.
The business woman, however, attributed the ugly situation to government’s policy of banning importation of goods, insecurity around farmers who cultivate wheat and sugarcane (raw materials), as well as COVID-19 restrictions in 2020.
The CEO of Cake and Food Domain Limited, an indigenous company, which is into baking and food, Temidayo Comfort Aderogba, also lamented the astronomical increase in the cost of raw materials, blaming the situation on fall in the value of the Naira against the Dollar, rising import duties and inflation. “The impact of these is low sales caused by low purchasing power,” she said.
Indeed, prices of baking materials have literarily hit the roof. For instance, a bag of flour, which sold for N11, 000 in the first three months of this year, went up to N15, 000 between May-July. By September same year, the price had gone up to about N21, 000 -N22, 000. A bag of sugar, which sold for N14, 500, now costs N21, 000. And butter, which sold for N11, 000 is N21, 000. Even nylon, which sold for N8 is N13.50.
Items which prices have shot up are endless. Beyond food items, groceries, transport fare, school fees, house rent, cooking gas and indeed, every other thing that concerns a man’s livelihood, has seen their prices skyrocket much to the discomfiture of Nigerians particularly low- and fixed-income earners.
The astronomical increase in the cost of (LPG), otherwise known as cooking gas, is probably the most astonishing. From N3, 500 or N4000 between January and early July, a 12.5 kg cylinder of cooking gas is now sold for between N8, 200 and N9, 000, depending on the area of purchase. And there are fears that the price may further rise, as importers of the product are said to have pulled the breaks on its importation.
At moment, domestic production of LPG accounts for 35 per cent, leaving about 65 per cent to imports. The fear is that if the halt in importation of LPG drags further, there will be drop in the supply of the product domestically and this will further push up the price of cooking gas unless the problems around the demand and supply of LPG are urgently addressed.
According to the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM), the reintroduction of customs duty and Value Added Tax (VAT) on imported LPG were the basic reasons for the halt in the product’s imports.
“The obvious devaluation of the local currency, inability to access foreign exchange by importers, the increasing international price against which the cost of domestic LPG is indexed, as well as the anticipated re-imposition of VAT and customs duties with retrospective application have all contrived to push the price of LPG upward,” NALPGAM executive secretary Bassey Essien, added.
More worrisome is the fact that the alternative to cooking gas, which is charcoal, doesn’t come cheap either. Based on the survey, a bag of charcoal, which sold for N2, 800 in the beginning of last month, is now between N4, 000 and N5, 000.
Ironically, it was the sharp rise in the price of kerosine that forced not a few Nigerians to turn to the use of cooking gas. They were, however, shocked to discover that the price of gas had gone up, pushing many of them to resort to charcoal which price has also increased.
Tales of woes
Some Nigerians, who spoke with The Nation, lamented that life has indeed, become a grind. For instance, Alice Osagie, a 41-year-old mother of four, who is into sale of fairly used clothes in Trade Fair Market, Lagos, said it has become extremely difficult to feed and push her children through school.
Narrating her ordeal Osagie said: “This business is what I have been using to assist my husband in building our home and raising our children, but lately, it has been tough. I withdrew my first and second child from a private school to cut down on school fees payments, yet it still seems tough.
“My husband is a security guard. Before, he comes home every day, but in order to cut cost from transport fare, he now comes only weekends. We currently owe about half of our house rent which has been due for five months now and also last term’s school fees of my two younger children.”
Despite being single, a commercial motor cycle rider, popularly called Okada, Emmanuel Aribise, complained about how he has limited the way he buys foodstuffs to cook and other extravagant spending even as an unmarried man.
Revealing to The Nation that he doesn’t send money home as he used to, he wondered at the possibility of settling down and having children under the prevailing harsh economic realities.
Monday Oliseh also said he lives and feeds his family on loans and IOUs because his salary is not enough. “I’m servicing a loan I got from a bank and my office. I’ve missed payments for two months now, the bank called me few days ago and complained of my slack payment.
“These days I don’t even buy things that I used to buy before for my kids. Only the older ones understand; the little ones do not understand that there’s no bread and biscuits,” he said.
The old ones are not left out, as Adebimpe Ajao, who sells petty items in front of her residence, said: “Since my over six decades in Nigeria, I have never experienced it this tough. My children do their bits by sending the little they can and there is almost no gain from these things I sell. I just do it so that I won’t be idle”
Even the ones considered as being rich are not having it easy. Derin Omowale said, for instance, that he hasn’t been able to take his family on their annual vacation because his business hasn’t been moving well coupled with the general increase in price of items.
“Since 2019, my family and I haven’t had our time out of the country as we used to. Poor business transactions and low savings are the major causes. I try as much as possible not to default in my children’s education, but it pains me that I can’t perform some of my philanthropic acts due to the situation of things,” Omowale told The Nation.
Why the rise?
One of the key drivers of the alarming uptick in domestic prices of staple foods and other commodities is inflation, which, simply put, is the general and progressive increase in prices and a crash in the purchasing value of the local currency, the Naira.
However, a report released by the Nigeria Bureau of Statistics (NBS) on Friday, October 15, showed that Nigeria’s headline inflation September 2021 dropped to 16.63 per cent compared to 17.01 per cent recorded in the previous month.
According to the report, the Consumer Price Index (CPI), which measures the rate of inflation, rose by 16.63 per cent year-on-year in the review month, representing 0.38 per cent point decrease compared to 17.01 per cent recorded in August, this year.
Food inflation, which is the biggest worry for the poor and a closely watched index, also dropped to 19.57 per cent in September, from 20.3 per cent recorded in the prior month while core inflation rose to 13.74 per cent, up by 0.33 per cent when compared with 13.41 per cent recorded in August, this year.
The Statistician-General of the Nigeria/Head of NBS, Mr. Simon Harry, attributed the deceleration in Nigeria’s headline inflation for about seven months to the introduction of policies by the government which impacted positively on most of the commodities.
“We have consistently maintained a decline for about seven months and the reason for that is some of the policies put in place by the government that are impacting positively on most of the commodities that make up the basket for the CPI.
“The government is very conscious of the effects of the COVID-19 that have impacted negatively on the economy and as a result, the economic sustainability plan that was formulated by the government has been taken as a very serious document to implement so it will cushion the effect.
“That has had an impact on several sectors of the economy, thereby having a multiplier effect on the parameters that are used to compose the CPI,” the NBS boss stated.
He expressed optimism that this trend would be maintained to a reasonable period of time, as long as the Government’s determination was sustained in the implementation of current policies that had been put in place.
Experts weigh in
Economist and Chief Executive Officer (CEO) of Centre for Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said the steady but marginal decrease in headline inflation over the past few months was a noteworthy development.
He, however, noted that the core inflation, which related largely to non-agricultural products, maintained an upward trend and accelerated by 13.74 per cent in September, as against 13.41 per cent in August, an increase of 1.24 per cent. He said this was largely a reflection of the impact of the further depreciation in the naira exchange rate.
Yusuf, a former Director- General of Lagos Chamber of Commerce and Industry, (LCCI), pointed out that in spite of the incremental deceleration being witnessed in inflation over the past couple of months, high inflationary pressure has remained a major concern to stakeholders in the economy.
The economist attributed the inflationary pressures to exchange rate depreciation, which has a significant impact on headline inflation, especially the core sub-index. “Liquidity challenges in the foreign exchange market impact adversely on manufacturing output,” he said.
He listed other drivers of the inflationary pressure to include insecurity across the country, which affects agricultural output, climate change, high energy cost; structural constraints which affect productivity in the agricultural value chain, and high transportation costs.
On way forward, the CEO of CPPE called on the government at all levels to address insecurity, due to its scale of importance as far as food production is concerned, and also ease logistics costs in the economy.
He also said there was the need to stabilise the foreign exchange market to reduce liquidity concerns and associated uncertainties and disruptions in the economy.
Besides, expeditiously resolving the nation’s port challenges and related bottlenecks, which negatively affects production flows, he said, was necessary.
