Nigerians to spend more as wheat prices soar

In coming months Nigerians could pay more for bread and other wheat flour-related confectioneries as wheat prices hit fresh highs. This is coming on the back of intensifying fears over a supply shortage, as the conflict in Ukraine halted the grain’s exports from the country and Russia.

Both countries account for about 30 percent of the world’s traded wheat and still have crops from last year to ship. “There is no end in sight to the upswing because 30 percent of the world’s wheat exports have been cut off from the global market,” said Muda Yusuf, CEO Centre for the Promotion of Private Enterprise (CPPE) in a statement.

“The current development is going to disrupt the supply of wheat in the global market. There is, therefore, a risk of a hike in the cost of wheat which will affect the price of flour and a knock-on effect on the price of bread and other confectioneries,” Yusuf stated.

Wheat traded in Nigeria, the international benchmark, has soared more than 40% while corn prices rose above 22% since Russia invaded Ukraine.

Food and agricultural experts are concerned about food security, as well as the upcoming food inflation figures which would be reported in the February inflation (CPI) report to be released in the coming week.

Omobola Adu, a senior investment officer at Afriinvest stated that food inflation this year is definitely going to witness both ‘cost-push’ as well as ‘demand-pull’ pressures this year.

“All through last year, Nigeria witnessed cost-push inflation as a result of the security issues witnessed in the various food baskets of the country.

“This year, the Russian-Ukrainian crisis has ushered in a new dimension of Inflationary pressures as the country would soon begin to feel the pinch of ‘demand-pull’ constraints as a result of wheat and corn scarcity.

“The combination of these inflationary pressures (demand-pull and cost-push) would see food inflation soaring in coming months and as a result headline inflation would follow,” Adu said.

The big price increases are already curtailing the ability of grain-importing countries like Nigeria and Turkey to purchase wheat.

“Demand is also shifting to alternative grains, leading to a significant rise in the prices of corn over the past few days,” Adu said.

“Corn traded in Nigeria has risen more than 20% since the Russian invasion,” he added.

Russia’s war in Ukraine has disrupted global grain and energy markets, which would definitely push up food prices with food-importing countries like Nigeria experiencing the most serious consequences in the medium term.

Emeka Ucheaga, CEO EU Intelligence and a financial analyst at Credit Direct stated that Russia’s war on Ukraine has the potential to exacerbate food insecurity around the world.

“Grain exports have been halted by lack of transportation because of port closures, while paying Russia has become more complex due to Western sanctions,” Ucheaga said.

“As for farmers’ globally, expectations of a stoppage in fertiliser exports from Belarus and Russia would also have an impact on global prices and production,” he added.

source businessdaynigeria