• Wed. Mar 29th, 2023

    Why prices of foodstuffs remain high despite 0.18% decline in inflation rate in June

    ByBassey Udo

    Jul 16, 2021

    Prices of major staple food items across the country have continued to soar despite the report by the National Bureau of Statistics (NBS) about a marginal decline by 0.18 percent in inflation rate for June 2021, a news service survey on Friday revealed.
    The survey showed that a number of incidental expenses outside the normal cost of production of the foodstuffs add up to the final overall prices obtained in the markets across the country. The incidental expenses are incurred by the producers of the items as a consequence of the deteriorating security situation in the country, the rising level of corruption and poverty, and the poor condition of the transportation system between the productions centres and the market.
    On Friday, the NBS, in its latest Consumer Price Index (CPI) for June 2021, said the country’s inflation rate dropped further by 0.18 percent, from 17.93 percent in May to 17.75 percent during the month.
    The CPI measures the rate of inflation in the economy over a month’s period.
    In the report, the statistics agency said despite the drop, prices of basic goods and services continue to rise in June, with increases noticeable in all classification of individual consumption by purpose (COICOP) divisions constituting the headline index.
    With the headline index increasing by 1.06 percent in June on a month-on-month basis, the NBS said this was about 0.05 percent higher than the rate recorded in May (1.01 percent), while the percentage change in the average composite CPI for the 12 months period ending June over the average of the CPI for the previous 12 months period was 15.93 percent.
    The NBS said this represented about 0.43 percent point increase over 15.50 percent record in May.
    The report said the urban inflation rate increased by 18.35 percent (year-on-year) in June, from 18.51 percent recorded in May, while the rural inflation rate increased by 17.16 percent in June, from 17.36 percent in May.
    On a month-on-month basis, the report said, the urban index rose by 1.09 percent in June, up by 0.05 points compared to the rate recorded in May, although the rural index rose by 1.02 percent in June, up by 0.04 percentage points over the rate recorded in May (0.98) percent.
    “The corresponding 12-month year-on-year average percentage change for the urban index was 16.51 percent in June, which is higher than 16.09 percent reported in May, while the corresponding rural inflation rate in June was 15.36 percent compared to 14.94 percent recorded in May,” NBS said.
    Regardless, the report said the composite food price index rose by 21.83 percent in June, compared to 22.28 percent in May.
    By implication, the report said food prices continued to rise during the month, although at a slightly slower pace than the previous month.
    The rise in the food price index was said to be a result of spikes in the prices of bread and cereals, potatoes, yam, and other tubers, milk, cheese and eggs, fish, soft drinks, vegetables, oils and fats, and meat.
    On a month-on-month basis, the report said the food price sub-index rose by about 1.11 percent in June, up by 0.06 percent points from 1.05 percent recorded in May.
    “All items less farm produce” or core inflation, which excluded the prices of volatile agricultural produce stood at 13.09 percent in June, down by 0.06 percent, compared with 13.15 percent recorded in May.
    “On a month-on-month basis, the core sub-index increased by 0.81 percent in June. This was down by 0.43 percent when compared with 1.24 percent recorded in May.
    “The highest increases were recorded in prices of garments, passenger travel by air and by road, motor cars and vehicle spare parts, shoes and other footwear, pharmaceutical products, medical services, hairdressing salons, and personal grooming establishments.
    “Others are cleaning, repair and hire of clothing, clothing materials, other articles of clothing and clothing accessories, furniture and furnishing and fuels and lubricants for personal transport equipment.”
    Following the NBS, the survey by the news service revealed that the price of yam, for instance, has remained high as a result of the incidental expenses incurred by farmers in the course of transporting the produce from their farms to the market.
    For instance, the survey said yam sellers in Enugu State say they usually spend over N500,000 to transport a truck-load of yam tubers from where they are produced in Benue State to the markets in Enugu State.
    The N500,000 expenditure, the yam sellers explained, comprised market levies to the various unions and associations, the high transportation cost as a result of the increasing price of petrol, and unofficial tolls they are forced to pay to area boys or youths in the area who demand settlements under various subheads, including loading cost, as well as monies to the police and other categories security personnel operating along the routes to the market.
    Apart from market levies and produce fees paid in the market, the traders said miscreants from the villages bringing the yams to the commodities collection point would not allow any truck to go without paying them to guarantee safe passage.
    Beyond this, they said there are always several loaders to settle, in addition to security fees to the police, soldiers, vehicle inspection officials (VIOs), and officials of Federal Road Safety Corps (FRSC) operating at various security checkpoints along the routes.
    “When all these incidental expenses are added to the cost of production, apart from middlemen who buy these items with the aim of reselling, the prices will continue to soar,” the traders said.

    Leave a Reply

    Your email address will not be published. Required fields are marked *