Research and Analytics
Research and Analytics
With the Nigerian government’s
ongoing focus on promoting agricultural development through its policies and budgetary plans, Flour Mills Nigeria Plc can leverage this support to build a strong agribusiness that can meet domestic food demand, generate export revenue, and create jobs. How
effectively is the company taking
advantage of this opportunity?
Looking further into the year, we recognize the possibility of upside inflation surprises, as the sub-par food harvests of last year could cause food supply to be slim during this year’s planting season, hence, propelling staple food prices northwards. Also, the impact of a base-effect sponsored moderation should become less material as we move further into the year, leaving the rate of inflation susceptible to the pass-through effect of soaring energy costs (fuel, electricity and gas), increased taxes associated with the finance act and currency depreciation. Our baseline expectation is for the headline inflation to average 14.81% in 2022 compared with 16.98% in 2021.
Rising world food prices for producers are making headlines and causing concerns among the public. The most recent data show a moderation in consumer food price inflation globally, but as we explain below, that could change in the coming months. This would only add to the high prices that consumers in many countries already lived through last year.
With 84% of Nigeria’s export (as at Q2’2020) as oil products, we reiterate that Nigeria does not really have an import problem. Nigeria has an export problem and until that problem is solved, average Nigerians will always suffer higher commodity prices due to the demand management strategy of the CBN anytime external shocks occur in the oil market.
