Food inflation shot up for the seventh successive month to 23.34% in September 2022 from 23.12% in August 2022. This is when food price levels in both months are compared with the prices in their corresponding months last year 2021.
At periods when food prices manifest not just as seasonal fluctuations due to planting and harvest times, but as more of structured price movements, as this, it is usually termed agflation, for its tendency to sway the direction of the headline inflation.
Top of this, since 2016, Nigeria has been battling with a vicious mix of high inflation, high unemployment, and slow economic growth, termed stagflation, a state of economic stagnation and high inflation.
The World Bank warned in June that, “if current stagflationary pressures intensify, EMDEs (Emerging and Developing Economies, like Nigeria) would likely face severe challenges again because of their less well-anchored inflation expectations, elevated financial vulnerabilities, and weakening growth fundamentals.”
Going by the strong pull of food prices on soaring inflation in Nigeria, solving stagflation would involve solving agflation.
For instance, a steepy climb in food prices pulled up the headline inflation (inflation on all items put together, food and non-food) from 17.6% to 20.77% this September.
The September shift of 23.34% in food price levels is the highest since the 24.6% figure in October 2005, 17 years ago.
The National Bureau of Statistics (NBS) highlighted likely factors responsible for these successive sharp increases in the annual inflation rate to include:
- Disruption in the supply of food products.
These disruptions are heightened by unprcedented floods across many states of the federation, which have destroyed farmlands, displaced rural farmers, and destroyed farm produce and food assets.
- Increase in import costs due to the persistent currency depreciation.
This impacts the costs of food imports and other non-food imports.
- General increase in the cost of production.
The above factors contribute to higher costs of transporting farm produce, greater volume of perished farm produce and scarcity at destination food markets.
Besides, increased costs of production result from higher cost of inputs in both agro-allied industries and hospitality businesses.
Beside households, hospitality and produce-dependent industries witnessed rising cost of staples including bread and cereals, potatoes, yam, and other tubers, oils and fats.
Analysing Agflation
Over time across the world, inflation has taken a meaning more serious than pumping air into a low-pressure soccer ball.
Today people readily see inflation as the rate of increase in the prices of products even when the products’ value remains the same or has even reduced.
For Nigeria, inflation rate has been on an upward trend since 2007.
Since 2005, the lowest annual inflation rates, at every second successive annual decline have been on the rise. The lowest rates rose from 5.4% in 2007 to 8.1% in 2014, and further to 11.4% in 2019.
Same with the highest inflation rates, at least at every second successive annual rise. The highest rates rose from 13.7% in 2010 to 16.5% in 2017, and further up to 17% in 2021.
Interestingly, agflation and stagflation rhyme and relate to inflation in its economic sense. But, beyond that, the morphology of the two words has less in common.
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