Every month, SBM Intelligence tracks the price movements of the ingredients Nigerians use to make a pot of the nationally celebrated Nigerian jollof rice for the average Nigerian family. Based on this, we are able to show the trends of food inflation in a simple manner for Nigerians. Since 2016, we have updated the index for every month except for December of any given year, where the demand from the Christmas holidays have an impact on food prices in a manner that is out of the normal distribution.
In the August 2018 release, we noted that the average national price of jollof rice had started rising again, this after declining in late 2017 (though prices then were significantly higher than the base price of July 2016). Indicators showed that the base effect that caused inflation to drop had been corrected for and the inflation would begin to rise, specifically in food inflation.
The SBM Jollof Index, has reflected this upswing as it began to rise from April and continues to rise. For the first time since we began to track this index, Wuse in Abuja has overtaken Kano as the place in Nigeria where it is most expensive to prepare a pot of jollof for a family of five, prices there are at an average of ₦7,670, while Kano still remains high at ₦7,390. This increase however, appears to be as a result of the impending Christmas season. Other factors mentioned in our interviews include; the increase in the cost of transportation of food stuff into the FCT, the crisis in the North and North Central, and flooding in the North.
Another key driver for the rise in the cost of jollof rice in Abuja is the cost of protein (turkey and beef) which remained stable for the first half of the year, but has risen by as much as 50% in some markets. This rise in protein cost is as a result of the increase in the cost of poultry farming. There has been an increase in the price of feed and vaccines.
In Kano however, cost of beef has declined from an average of ₦1,000 to ₦800, compared to a rise from ₦1,500 to ₦2,000 for similar quantity of beef in Wuse, and from ₦1,500 to ₦1,700 in Awka. Almost counter-intuitively, beef is cheaper in Lagos at ₦1,000 than it is in Abuja which is double this price. Across the country, the price of tomatoes have dropped. The reason for the drop in the price of tomatoes is because of the dry season has arrived, and it is easier to grow tomatoes during this season.
The Next Quarter
We expect two pressures to drive the price upwards:
- The continuing violence in the key food producing areas and along most of the cattle routes means that will continue to put upward pressures on the price of proteins as well as key staples like rice and beans.
- The impending end of year festivities will also bring in the seasonal price increases.
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