DESPITE the government’s commitment to reducing inflation, prices of commodities keep rising in Nigeria as the value of Naira erodes nearly on a monthly basis.

The National Bureau of Statistics released the inflation data for October which indicates that inflation has risen to 11.61 from 11.24 in September.

That’s about 3.2 per cent higher than it was in September and 5.4 per cent higher than it was in August. This is perceived as a direct effect of the closure of land borders in August by the Federal Government.

The Central Bank of Nigeria apparently had hoped the initiative would improve both the demand and supply of locally manufactured commodities such as rice. The effect was soon to be noticed by Nigerians when food prices started increasing in the market.

According to a report by Proshare, the price of a 50kg bag of imported rice, which was selling at N14,500 before the closure of the border, now sells for N27,000. Locally produced rice has not been left out of the party as the price of Lake Rice, a product of an alliance between Lagos State and Kebbi State, has increased by 22 per cent to N16,500 from N13,500 before the closure of the border. There are those who sell it at as high as N19,000.

The spike in the price of rice in the market is linked to the principle of demand and supply. A restriction on the importation of a commodity translates into dipping supplies. This then leads to an increase in price because of unmet demands. As a result, a single commodity such as rice which is a staple food can push the headline inflation high if not taken care of appropriately.

According to the United States Department of Agriculture (USDA), Nigeria is still unable to meet up with its local rice demand. Nigeria’s local production for 2017/2018 is 4.73 million metric tons while it imported 2.1 million metric tons and its domestic consumption was estimated as 6.9 million metric tons.

READ MORE: https://www.icirnigeria.org/nigeria-and-its-dilemma-of-inflation/