[FILES] People buy and sell food at the Illaje market, in Bariga, Lagos. (Photo by Benson Ibeabuchi / AFP)

There seems to be no respite for Nigerians on food prices despite the rise in naira value as the March inflation figure rose to 33.20 per cent.

Specifically, food prices, which soared by 40.01 per cent, appeared to have defied various monetary interventions by the Central Bank of Nigeria (CBN) and further compounding  the inability of Nigerians to have decent meals

The National Bureau of Statistics (NBS) in its Consumer Price Index (CPI) report released yesterday, said the inflation rate jumped to 33.20 per cent in March 2024 compared to the February 2024 headline inflation rate, which was 31.70 per cent.

According to the NBS, the March 2024 headline inflation rate showed an increase of 1.50 per cent points when compared to the February 2024 headline inflation rate.

On a year-on-year basis, the headline inflation rate was 11.16 per cent points higher compared to the rate recorded in March 2023, which was 22.04 per cent.

On a month-on-month basis, the headline inflation rate in March 2024 was 3.02 per cent, which was 0.10 per cent lower than the rate recorded in February 2024 (3.12 per cent). This means that in March 2024, the rate of increase in the average price level is less than the rate of increase in the average price level in February 2024, the report said.

The bureau further noted that the food inflation rate in March 2024 was 40.01 per cent on a year-on-year basis, an increase of 15.56 per cent points higher compared to the 24.45 per cent rate recorded in March 2023.

NBS explained that the rise in food inflation on a year-on-year basis was caused by an increase in prices of garri, millet, bread and cereal, yam, dried fish, meat, and fruits.

On a month-on-month basis, the food inflation rate in March 2024 was 3.62 per cent which shows a 0.17 per cent decrease compared to the rate recorded in February 2024 (3.79 per cent), the bureau said.

NBS found that the decline in food inflation on a month-on-month basis was caused by a fall in the rate of increase in the average prices of Guinea corn flour, Plantain Flour, among others (under Bread and Cereals class), Yam, Irish Potatoes, Coco Yam (under Potatoes, Yam & Other Tubers class), Titus fish, Mudfish Dried (under Fish class), Lipton, Bournvita, Ovaltine (under Coffee, Tea, and Cocoa class).

Reacting to the continuous rise in inflation, Professor Godwin Oyedokun of Lead City University, Ibadan, Oyo State, said when the government is ready to bring it down, it will come down.

According to him: When the exchange rate was N1,900/$, people said it is because we are not producing and therefore exporting nothing, now that it has come down to N1,100/ $, what are we producing?

Let no one deceive you, people are benefiting from this persistent rise in inflation so when the government is ready to bring it down it will.

The March Consumer Price Index (CPI), which measures the rate of inflation was released at a time when measures by the CBN to strengthen the naira against foreign exchange have seen some positive results. The naira has appreciated against the dollar in recent weeks, gaining over 40 per cent from about N1, 900/$ to about N1, 100/$1 now.

On his part, an economist, Kelvin Emmanuel, said the continual surge in inflation despite a 600-basis point hike in MPR shows that while the exchange rate is responding to monetary tightening, inflation that is a result of primary production in food supply, higher energy costs for the nine items that form Nigerias energy basket, and general cost of transportation, continues to fuel higher Cost Price Index (CPI).

He added: I think we would seek a peak in inflation when the impact of stronger and stable naira begins to kick in on the prices of commodities around the end of Q2 “ especially for the ones exposed to exchange rate risk.

A financial analyst, Abubakar Umar, blamed the 33.20 per cent on the failure of businesses to reduce prices for the upsurge.

He noted that prices have been going up rather than decelerating due to the strengthening of the naira.

Price wont reduce that easily, the best thing to happen is to have stability, a stoppage on the increase in the price of goods. Then for inflation, we are supposed to experience a stoppage in the rise unfortunately that will not happen because of electricity issues,

He then declared that the inflation figure would further go up in April.

His words: In April, inflation will go up. The dollar is reducing yet prices are going up. Market people are saying its old stock but even if it is new they will not reduce it. They will want to maintain the price level for surplus profit to offset the loss they suffered on the forex rate because a lot of them recorded losses when the rate was down. Prices going up have shown that a stronger naira has not been able to tame high food inflation in the country.

The CBN had at its last Monetary Policy Committee (MPC) meeting, raised Nigerias interest rate from 22.75 per cent to 24.75 per cent to curb inflation. This interest rate increase has attracted mixed reactions from economic experts who believe the policy will hurt the economy more than it will help to bring down inflation.

An economist, Paul Alaje, who was speaking at a recent forum, said the hike in interest rates has made the cost of borrowing high. He said even those, who borrowed before are now receiving letters from their banks because of the review in interest rates.

He said: So it is going to have an impact negatively on businesses. SMEs borrow money too and they will also face the same challenge.

While agreeing that there is a need to raise the interest rates, Alaje said raising it by 600 basis points in a space of five weeks is just too much.

The cost of the increase is more than its benefit, he said, adding When you are combating inflation and you increase the interest rate so high, it will discourage investment and when you discourage investment you bring down the GDP.  Of course, the forex will grow because foreign investors will come in with their portfolio investments, but whether they will invest in the real sector, the answer is no. 

From his perspective, President of the Nigerian Association of Small and Medium Enterprises (NASME), Abdulrasheed Yerima, said the new interest rates policy will negatively affect investment in the small and medium enterprise (SME) ecosystem, especially startups who are trying to start new businesses in MSME.

According to him, It is also going to affect expansion negatively. The government should have waited for us to adjust to this high cost of energy and high cost of transportation. Yes, the naira is firming up, but they should have allowed us some time for the naira to firm up because some of us import our raw materials from overseas.

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