Dear Subscriber,
Rising Food Prices and Heightened Insecurity – A Double Whammy for Consumers
Nigeria’s food supply is under siege, as the steady drumbeat of inflation grows louder. Month-on-month food inflation climbed to 2.19% in May from 2.06% in April, a reflection of the relentless rise in the cost of some essential staples. However, beneath the surface of these rising prices lies a more insidious threat, the unyielding grip of environmental and security crises ravaging key food-producing areas. The recent flooding in Mokwa has severely impacted agricultural output and disrupted the transportation link between Northern and Southern Nigeria, heightening supply chain disruption.
As if that were not enough, man-made chaos exacerbated the problem. Violent clashes in Benue State, Nigeria’s food basket, have displaced thousands of farmers, robbing them not only of their homes but also of their means to cultivate and harvest. These disruptions have splintered supply chains, creating gaps that translate into scarcity and rising costs at every market stall. The consequences are most deeply felt in the Northern and Middle-belt regions, where families already teetering on the edge of poverty are finding it difficult to afford food. If left unaddressed, the twin demons of insecurity and inflation threaten to spiral into a full-blown humanitarian crisis.
CBN to Hold Rates as Inflation Shows Signs of Reversal in June
At the CBN’s next meeting on July 21/22, two outcomes are likely – a 40% probability of a slight rate cut of 25 basis points, and a 60% probability of maintaining the status quo at 27.5%. Based on its cautious wait-and-see approach, the likelihood of holding rates steady remains high. While headline inflation figures offer a breath of relief, the deeper structural strictures suggest that price stability remains fragile. Nigeria’s price inflation has been less responsive to interest rate movements than it has to supply chain shocks.
This edition of the Unity Bank Digest provides a comprehensive analysis of these economic trends and engaging lifestyle and entertainment stories for your reading pleasure.
Enjoy!
