- Tackling Food Inflation Crucial To Achieving Sustainable Decline In Inflation Rate- Agora Policy
Knocks and condemnation have trailed the recent introduction of zero import duty on food produce and other policies by the President Bola Ahmed Tinubu’s.
This follows a proclamation by Agora Policy, a government think tank, that it takes more than emergency interventions and monetary policies to address food inflation.
In a report on Friday, Agora Policy said tackling food inflation is crucial to achieving a sustainable decline in inflation rate in the long term.
“Addressing Nigeria’s food inflation will be crucial for achieving a sustainable decline in inflation rate in the long-term. This will take more than seasonality or emergency interventions or even monetary policy,” the think tank said.
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While monetary policies are essential for controlling demand-side inflationary pressures and stabilising the exchange rate, Agora Policy said they do not directly address supply-side issues like food production, storage and distribution.
“Therefore, it will be necessary to focus on tackling the structural issues in the agricultural sector, including insecurity, to address food inflation,” the report said.
“On the whole, it would appear that the ongoing inflationary spiral seems to have peaked. With monetary interventions eventually kicking in and barring another round of shocks in terms of significant hike in petrol prices or major depreciation of the value of the Naira, Nigeria’s inflation looks set to decelerate further in the coming months.”
Generally, Agora Policy said Nigeria’s inflation rate has been high for some time.
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“The last time the country recorded single-digit inflation figures is close to a decade ago: in May 2015, food inflation was 9.78% and in January 2016, headline inflation was 9.62%,” Agora Policy said.
“Double-digit inflation has been the norm for the past eight to nine years. Apart from the shocks from subsidy removal/Naira depreciation, another development that has kept inflation rates high in Nigeria was the invasion of Ukraine by Russia.
“The lingering effects of the war significantly affected global commodity prices for food and energy which disrupted existing supply chain, causing inflationary pressures to rise across the world.”
As a country heavily dependent on imports for its food and fuel needs, the think tank said Nigeria has been particularly affected by these global disruptions.
