Fuel drives inflation in Nigeria, war in Ukraine pushes up food prices

Lagos-based Nuli Juice Company, which also owns restaurants, is among those hit by the cost of diesel, which it says has soared to 680 naira ($1.64) a liter from 215 naira within weeks.

“It’s not the right time for business. We hope never to close, but if the situation continues like this, it makes business more and more difficult,” said Chinyere Onyia, head of quality, production. and corporate purchases. , noted.

Russia’s invasion of Ukraine last month has added to financial market volatility, pushing up commodity prices and affecting logistics, potentially derailing the economic recovery from COVID-19 in Nigeria and elsewhere.

A halt in grain exports from the main Ukrainian producer could have serious repercussions for Nigeria.

Wheat was Nigeria’s second largest import in the fourth quarter after gasoline, the statistics office said on Tuesday.

A spike in international crude prices is theoretically positive for Nigeria as an oil exporter, but it still faces additional costs as it depends almost entirely on imported gasoline, which it subsidizes.

“In the long term, we may not benefit (from high oil prices) because of the tendency to bring inflation into the country,” Simon Harry, director of the National Bureau of Statistics, said on Tuesday.

Victoria Laadi, owner of a cement brick factory that uses diesel for machinery and transport, said he was already feeling the effects.

“No customers are willing to pay the increase, so it affects our business. I haven’t worked for a week or two,” he said.

Inflation in Nigeria has been in double digits since 2016, impacted by food pressure and a weak currency.

Analysts expect flour prices to rise to 30,000 naira ($72) per bag in the next quarter, from 22,000 naira as wheat prices rise.

The central bank is due to meet next week to set interest rates and could face pressure to reconsider its dovish stance given continuing double-digit inflation.

($1 = 415.45 naira)

(Additional reporting by Camillus Eboh; editing by Barbara Lewis)

By Chijioke Ohuocha

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