Why food prices are on the rise – LCCI

The Lagos Chamber of Commerce and Industry (LCCI) has offered an explanation on why prices of food are increasing in Nigeria. According to the chamber, the Consumer Price Index (CPI) data released by the National Bureau of Statistics (NBS) had revealed that inflation rate (year-on-year) continued to increase, rising to 26.72% in September from 25.80% in August, implying 0.92% points increase, and 5.94% points when compared to 20.77 recorded in the corresponding month in 2022. On a monthly basis, consumer prices rose by 2.1% in September, following a 3.2% surge in the prior month, which was largely driven by increase in food and core inflation.

The Director-General of LCCI, Dr. Chinyere Almona, stated that food inflation rate increased to 30.64% in the month, implying 1.30% points increase from 29.37% in the previous month and 7.30% points increase when compared to 23.34% points in the corresponding month in 2022. In the same vein, core inflation increased to 21.84%, 0.69% point and 4.35% points increase when compared to 21.15% and 17.49% in August 2023 and September 2022, respectively. In terms of contributions of items, the data revealed that food and non-alcoholic beverages contributed the highest to the price increase at 13.84% followed by housing water, electricity, gas and other fuel (4.47%), clothing and footwear (2.04%), transport (1.74%) as well as furnishings and household equipment and maintenance (1.34%). 

After nine consecutive months of acceleration, the outlook for inflation appears negative while the chamber said it is concerned about the continued uptick in inflation (year-on-year), and, its impact on consumers’ spending and manufacturing productivity in the country. “As a result, we anticipate economic policymakers to give priority to inflation as well as businesses in the short-term to implement a variety of cost reduction strategies, including downsizing and local sourcing of input factors, as they bid to lower operating expenses. Also, households must consider the costs/prices of items when catering to their immediate needs”, Dr. Almona stated. 

As a way forward, the LCCI recommends that the government should focus its efforts at boosting supply rather than looking for a decline in demand. It also implored the government to address challenges inhibiting domestic production and ease the bottlenecks to the distribution of goods within the country. “Further, we urge the government to continue to address the problems of insecurity and other factors affecting agriculture productivity in the country to improve food supply”, the Director-General said, while urging the Central Bank of Nigeria (CBN) to improve the flow of credit to the real economy.