Nigeria’s high food costs will last until 2023, IMF.
According to the International Monetary Fund, the conflict in Ukraine would continue to put downward pressure on commodity prices, hurting oil and gas prices in 2022 and food prices in Nigeria and other countries far into 2023.
This was revealed in the Washington-based lender’s ‘World Economic Outlook: War Sets Back the Global Recovery April 2022’ study.
Inflation is anticipated to continue high for far longer than originally forecasted, according to the report.
“With the effect of the Ukraine conflict and increasing pricing pressures, inflation is projected to stay elevated for longer than previously forecast,” it stated.
“The battle is expected to have a long-term influence on commodity prices, with oil and gas prices rising in 2022 and food prices rising far into 2023.” (because of the lagged impact from the harvest in 2022). Inflation is expected to be 5.7% in advanced economies and 8.7% in emerging market and developing economies in 2022, respectively, up 1.8 and 2.8 percentage points from the January World Economic Outlook.
“Inflation in advanced economies is expected to be 2.5 percent in 2023, while emerging market and developing economies are expected to be 6.5 percent” (0.4 and 1.8 percentage points higher than in the January forecast). However, like with the economic prognosis, these inflation predictions are fraught with uncertainty.”
Energy and food costs, according to the IMF, contributed considerably to headline inflation in 2021, with variable degrees of contribution across regions. The dramatic increase in oil and gas prices, according to it, resulted in an increase in energy expenses.
“These increases were the primary driver of headline inflation in Europe and, to a lesser extent, the United States,” the report stated.
“Rising food prices had a big influence in most emerging market and developing countries, as adverse weather hampered crops and rising oil and gas prices drove up fertilizer costs. Increased costs for foreign food commodities have varying effects in different nations, based on the proportion of food in households’ consumption baskets and the sorts of foods eaten.
“Households in low-income nations are particularly vulnerable to price fluctuations in staple cereals, as their diets are generally dominated by a single grain.” Food inflation has been virtually entirely driven by rising food costs in low-income nations where wheat, maize, and sorghum comprise a substantial component of the diet (particularly in Sub-Saharan Africa).”
Food inflation is predicted to be robust by 14% in 2022, before dropping by a little fraction in 2023, according to the report, with commodity price rises expected to continue through 2022 before relaxing in some ways in 2023.
