Rice, oil prices to increase further due to India’s export prohibition, Meristem predicts – As a consequence of a partial ban on rice exports in India, Meristem has cautioned Nigerians to expect the prices of rice, vegetable oil, and other import-reliant commodities to rise significantly this month.
It also added that higher logistic costs, weak road networks, global energy, and premium motor spirit (PMS) pump prices are other factors that will contribute to this imminent rise.
This prediction was made in its most recent “Macroeconomic Update: Inflation Expectation” report, which was distributed to reporters.
The report stated, “We anticipate a continued increase in the price of rice and oils as a result of India’s partial prohibition on rice exports, which has had a significant impact on the global rice supply.
“We also anticipate that higher logistic costs and inadequate transportation networks will have a further impact on food prices. We expect food inflation to increase by 173 basis points to 28.71% in August 2023.
In addition, the headline index is anticipated to increase due to rising global energy and premium motor spirit (PMS) pump prices.
The prominent Nigerian asset management and financial advisory firm had warned that “the persisting difficulties in sourcing foreign exchange (FX) and depreciating exchange rates are also expected to drive up the prices of import-dependent items such as petroleum products, motor vehicles, clothing and fabrics, etc., which typically influence the core index movement.”
“Overall, we anticipate that headline inflation will rise by 129 basis points to 25.37% (compared to 24.08% YoY in July 2023)”
The country’s foreign exchange crisis worsened on Thursday following reports that the naira was trading at N945 per dollar on the parallel market. This is likely to lend veracity to the Meristem forecast for this month, as rice imports are not among the items for which the Central Bank of Nigeria can provide dollars.
In September, the price of a 50-kg sack of rice is expected to reach N60,000, as reported by BusinessDay. Due to paddy shortages and increased production costs, small and medium-sized rice mills have either shut down or reduced their production capacity.
“We travel great distances to obtain paddy, and even then, you may not be able to obtain the quantity you desire at once. BusinessDay reported in August that Jonathan Joshua, national vice president of the North Central Millers Association of Nigeria, stated that most minor rice mills have closed due to the paddy shortage.
“By September, the price of local rice is anticipated to increase to between N55,000 and N60,000. This is due to the scarcity, and state governors are currently soaking up a lot of it as a palliative,” Joshua explained.
Currently, a 50-kg sack of rice can be purchased in Abuja for a maximum of N45,000, while in Lagos, the price ranges between N42,000 and N45,000. In Port Harcourt, it is available for a maximum price of N46,000, while in Ibadan, the maximum price is N45,500. This information was obtained from nigerianprice.com.