Business

LCCI: Flood fuelling spike in foodstuff price, inflation

The Lagos Chamber of Commerce and Industry (LCCI) has raised the alarm that the rising flooding in the country, mostly in the northern region, is escalating pressure on food prices, thereby putting the country on the verge of crisis and more inflation. President of LCCI, Mrs. Toki Mabaogunje, disclosed this to New Telegraph in Lagos, saying that the country’s agricultural food basket was being threatened following the unprecedented flood that have washed away crops on a large scale and disrupted output projections in agriculture. Mabaogunje explained that the flood havoc was putting persistent pressure on consumer prices, stemming largely from the sustained uptrend in food inflation. According to her, the Chamber is concerned with the recent incidents of flooding in key food-producing states in the North.

The LCCI president noted that over two million tonnes of rice was lost to flood while other crops such as sorghum, corn and millet were also affected. To her, this situation, if not expeditiously addressed and managed, would escalate the pressure on food prices, thereby putting the country on the verge of a food crisis. She said: “As a Chamber, we note the sustained acceleration in headline inflation since September 2019. According to official statistics, inflation rose by 13.22 per cent year-on-year in August 2020, its highest level since April 2018. On monthly basis, consumer prices accelerated by 1.34 per cent in August 2020 compared to 1.25 per cent in the preceding month. The persistent pressure on consumer prices stems largely from the sustained uptrend in food inflation.

“The Chamber notes with concern the recent incidents of flooding in key food-producing states in the North. This occurrence has wiped off food and cash crops on a large scale and disrupted output projections in agriculture. “According to local media reports, over two million tonnes of rice were lost to flood. Other crops such as sorghum, corn and millet were also affected. This situation, if not expeditiously addressed and managed, would escalate the pressure on food prices, thereby putting the country on the verge of a food crisis.

“Rising inflation trajectory has serious implications for businesses regarding production cost, investment real return rate, and overall economic performance.” However, the renowned business entrepreneur forecast that the Chamber expected inflation to sustain its upward trajectory for the rest of the year. To her, the major drivers of inflation are structural factors, which are beyond the purview and control of monetary authorities.

In addition, the combination of food supply shocks, foreign exchange restrictions on food and fertilizer imports, higher energy costs – electricity and petrol, exchange rate adjustment, poor infrastructure, and insecurity in major food-producing states would pressurize domestic price level in the near term.

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