Falling Food Prices Lift Inflation — But Farmers, Manufacturers Feel The Pain
By OBI DAVIES
A Turning Point—or a Warning Sign?
NIGERIA’S inflation rate is finally slowing, propelled by sharply lower food prices and a stronger naira. After years of soaring living costs, the inflation rate dipped to 16.05% in October, inching closer to the government’s 15% target and offering relief to households long squeezed by high prices.
But behind the encouraging numbers lies a deeper, more complex story—one of struggling farmers, fragile demand, and an economy whose gains may be masking structural weaknesses.
Food Prices Plunge, Driving Disinflation
Food—historically Nigeria’s biggest inflation driver—is now doing the opposite.
A nationwide price survey shows dramatic year-on-year declines:
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Rice: down 24% (₦92,000 → ₦65,000–₦75,000)
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Beans: down 48% (₦144,000 → ₦75,000)
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Garri & onions: down 40–70%
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Tomatoes & pepper: down 65%
Other household staples such as eggs and noodles have remained stable, while fashion and household goods have barely moved. Even building materials have slowed in price growth, except cement, which rose by about 17%.
At the heart of this relief is a firmer naira. The currency has gained nearly ₦260 to the dollar over the past year—about 15% appreciation—reducing import costs and helping stabilize retail prices.
Mixed Reactions: Government Optimism vs. Economic Caution
President Bola Tinubu and CBN Governor Yemi Cardoso have repeatedly highlighted the inflation slowdown as proof that government reforms are working. The CBN cut interest rates for the first time since 2020, citing “entrenched disinflation.”
But analysts caution that the numbers may reflect weakening demand rather than improving productivity.
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Some research firms, including Renaissance Capital, believe actual inflation may be closer to 12%.
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Farmers and manufacturers argue that the collapse in prices is driven by consumer hardship, not economic health.
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Core inflation remains high due to elevated fuel prices and production costs.
Farmers: “We Are Bearing the Losses”
While consumers benefit, farming communities are hurting.
Seasonal harvests have flooded markets, but demand remains weak because households have less money to spend.
Farmers report losses so severe they fear many will not return for the 2026 planting season.
Kabir Ibrahim of the Nigeria Agribusiness Group puts it succinctly:
“The market is full of food, but Nigerians cannot buy. Farmers must slash prices just to survive.”
Others warn that heavy food importation is worsening the crisis. Nigeria spends $10 billion annually on food imports, with only $400 million earned from agricultural exports.
Former CBN Governor Sanusi Lamido Sanusi warned that cheap imports are wiping out local producers:
“In bringing down food prices, we wiped out producers’ profits. Mills are shutting down, farmers are going bankrupt.”
Manufacturers Struggle with Weak Demand
The manufacturing sector paints a similar picture.
Unsold inventory rose to ₦1.04 trillion in the first half of 2025, indicating collapsing consumer purchasing power.
Despite the stronger naira, many manufacturers say:
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logistics costs
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security concerns
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high bank lending rates
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power shortages
continue to keep production costs high.
Economists warn that pockets of deflation are emerging—often a sign of economic stagnation rather than stability.
Why Inflation Is Falling—But Hardship Persists
Experts say disinflation has not yet translated into true economic recovery because:
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Income erosion from previous inflation spikes means households still cannot afford much.
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Structural bottlenecks—poor roads, high diesel costs, insecurity—keep production expensive.
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Weakened demand is forcing prices down artificially, hurting producers.
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Fiscal leakages and poor spending discipline strain government finances and reduce liquidity.
According to CPPE’s Dr. Muda Yusuf, hardships remain especially in essential areas: food, transportation, housing, energy, health, and education—sectors that make up 84% of Nigeria’s inflation basket.
Is Nigeria Nearing Its Target—or near a New Crisis?
Experts are divided.
Optimists see the inflation dip as the beginning of genuine stability.
Skeptics see it as a sign of a stressed economy where people simply cannot afford to buy much.
What everyone agrees on is this:
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The journey to 15% inflation is within reach.
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Sustaining it will depend on reviving production—especially in agriculture—while strengthening consumer purchasing power.
As Nigeria edges closer to its inflation target, the central question remains: Is this the start of real recovery, or a fragile calm before deeper economic strain?
