IMF: Rising food prices fuelling inflation in Nigeria, other Countries

The International Monetary Fund (IMF) stated that rising food prices is the major factor fueling inflation in Nigeria and other Sub-Saharan African countries.

The body explained that inflation is rising around the world, but because food accounts for about 40 per cent of the SSA’s consumption basket, as it plays a major determining role in inflation.

In a blogpost on Monday, the IMF revealed: “Food inflation increased throughout 2019, on average, across 25 countries in the region where monthly food price data are available.

“After remaining stable around seven to eight per cent (year over year) since the beginning of the pandemic, food inflation started to rise again from April this year to some 10 per cent in October. The chart shows how food inflation is outpacing and contributing to the pick-up in overall consumer price inflation in sub-Saharan Africa, which rose to about eight per cent in October, up from around five per cent in 2019.”

According to the IMF, the recent increase in food inflation is attributed to rising oil prices (which raise fertilizer prices and transportation costs), droughts and export restrictions imposed by some major food exporters, and stockpiling in some countries.

The body said, “In addition, pandemic containment measures disrupted production and imports of seeds and fertilisers and caused labour shortages during planting seasons.

The IMF noted that food inflation and consumer price index inflation could moderate if commodity prices eased and pandemic-induced global supply chain disruptions were solved.

The IMF said on the average inflation would continue to rise in 2021 before dropping in 2022 depending on commodity prices and the resolution of supply-demand mismatches.

The international fund body said higher food inflation would worsen the situation for countries already facing food insecurity and shortages, and largely impact poor households.

“Fighting food insecurity through targeted social assistance and insurance can help populations cope. Avoiding trade barriers and improving access to finance, seed stocks, insecticide, fertilizer, anti-erosion measures, and irrigation are also important,” IMF added.