Analysts Forecast Higher Food Prices, Heightened Smuggling in Q2

Emmanuel Addeh in Abuja

On the back of the current war between Russia and Ukraine, analysts at Proshare Research, have predicted higher prices for a number of imported items, including wheat, flour, maize, sorghum, among others.

For sub-Saharan Africa in particular, the experts stated that the energy and food commodity shortages have wider implications, including heightened smuggling of food items into the country as a result of higher excise duty.

Stating that Nigeria’s wheat import bill alone stands at $2 billion, the group noted that given the current situation in both countries, which produce a huge volume of the wheat consumed worldwide, the price of wheat globally has already risen by almost 40 per cent.

Stressing that there have been pressure on the prices of imported food commodities especially both wheat and maize, the organisation predicted that there will further be a knock-on effect on beans and maize.

“Nigeria’s import bill for wheat is $2 billion per annum. The global price of wheat has spiked by 39.75 per cent since the crisis. The price surge coupled with exchange rate pressures on the naira is expected to push the price of a bag of flour from the current level of N22,000 towards N27,000-N30,000 in the next quarter.

“It will also have a knock-on effect on the prices of substitutes owing to a high level of cross elasticity. Therefore, we expect a surge in the prices of beans, yam, etc.

“It will also affect the smuggling of maize, sorghum and ethanol across Nigeria’s porous borders with attendant consequences on customs and excise revenue. It will also have an effect on the fiscal consolidation in the budget of 2022,” Proshare stated.

In addition, it pointed out that developing economies like Nigeria will face stiff challenges as it navigates its way through a monetary policy stance to confront higher inflation in March and April whilst simultaneously managing a growing debt service burden.