Nigeria’s food price inflation has soared to 21.8% in February 2021. It is the highest rate of food price inflation in Nigeria since October 2005. Nigeria’s National Bureau of Statistics (NBS) has blamed the rise on prices for bread, cereals and root vegetables such as potatoes and yams. Across the past 12 months, food prices rose by 17.25%.

Price rises are highest in Kogi State (30.47%) and Ebonyi (25.73%)- both in central Nigeria, and Sokoto (25.68%) in the northwest of the country. The lowest prices rises have been in Gombe (19.32%), Bauchi (18.74%), and Akwa Ibom (18.70%), all in the eastern half of the country.

Nigeria has been beset by problems because of the COVID-19 pandemic. The closure of land borders and chaos at the ports has helped contribute towards price rises. The pandemic also caused a precipitous fall in oil prices, damaging Nigeria’s export earnings. All prices have since recovered and have been rising since the end of October. However, this week has since prices fall sharply again, with a big sell off on Thursday. Further falls today have raised speculation that the market is turning bearish again.

The Naira has continued to depreciate against the dollar over the past year (the Naira has actually halved in value since 2016). Officially there are around 410 Naira to the US dollar. The black market rate is closer to 500 Naira to the dollar. It reflects a trying time for importers and distributors, with fx availability drying up.

The perceived long term weakness in the Naira almost certainly sealed the decision by South African supermarket chain Shoprite to decide to exit in 2020. We think it may well play a key role in Massmart CEO Mitch Slape’s decisionmaking on whether to stay or go.