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Yewande Adigun, a pepper seller at Ipodo market in Ikeja, Lagos,
said the prices of food items are increasing by the day, without tangible
explanations, apart from the rainy season.

“It is true that things are usually expensive this season, rainy
season, but this time around, it is very serious and customers especially do
not understand,” Mrs Adigun said.

“The prices of baskets of the tomatoes I sell have increased. A
basket of tomatoes today cost N9000. I bought it N2800 last week. Do you
understand, and that is what people have been talking about since morning. The
price increase cuts across almost all the things that are sold in the market”
she explained.

Harsh faces of food sellers adorn the markets with threats to
take their goods home than sell at give away prices.

Reflection of global
trend

Lydia Olushola, an economist and consultant at Skytrend Nig. Ltd
said to a large extent, rising food prices usually reflect global trends.

“Food-price inflation is sometimes globally prone, with the
prices of different food types such as grains, cooking oils, vegetables, meat
and other stuff all rising by varying degrees reflecting, in part, more intense
competition for the same resources in the production of different food
products. Sometimes however, local factors are also responsible for pushing up
prices of certain items in individual countries”.

Ms Olushola added that food price inflation affects general
price inflation since it contributes directly to general consumer-price
inflation as food is a major component of the Consumer Price Index.

She also said that if not addressed accordingly, it may lead to
non-food inflation as higher food-price inflation may consequently prompt
higher earning demands to compensate for rising food costs, consequently
bringing about some cost-push inflation. Besides that, it may generate higher
inflation expectations.

“People tend to work on the anticipation that things are usually
expensive in one period or the other of the year, create higher inflation
expectations for that period, and set prices accordingly, which would now
generate some form of second-round effects on prices”.

She however says an economy with a credible monetary-policy
framework will help to keep inflation expectations under control in the event
of unexpected price surge.

Rising price index

The Composite Consumer Price Index (CPI) rose 12.5 per cent
year-on-year in April, according to the latest report issued in May by the
Nigerian Bureau of Statistics (NBS). This is higher than 11.8 percent recorded
in the previous month. The monthly change of the CPI was 1.2 per cent increase
in April when compared with March.

The year-on-year average consumer price level as at April for
urban and rural dwellers rose by 7.9 and 14.8 per cent respectively.

Average monthly food prices rose by 1.4 percent in April when
compared with March of same year. The level of the Composite Food Index was
higher than the corresponding level a year ago by 14.3 percent. The average
annual rate of rise of the index was 13.6 percent for the 12-month period
ending April.

The rise in the index was caused mainly by increase in the
prices of some food items like yam, potato, meat, sea food, fruits, tomatoes, fresh
vegetables and non-alcoholic beverages.

Global food prices rose notably in 2007 and in early 2008, with
the prices of several agricultural commodities such as wheat, maize and, more
recently, rice, surging ahead. As well as heightening social concerns, higher
food-price inflation has also triggered concerns over broader price stability
and led to some delicate weighing of risks by monetary policy-makers, at a time
of unusually high uncertainty over global growth.