Inflation Pushes Bread Prices High as Bakers Quote New Costs, Give Reasons
- Bakers and bread sellers have cited various reasons the price of bread will continue to rise in the market
- They disclosed that high exchange rates and scarcity have contributed to the enormous cost of the staple nationwide
- Bakers lamented that low output in wheat-producing regions has been responsible for high prices
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
There are signs that bread prices and other flour-based food items will continue to skyrocket as bakers and millers say there is no hope for solutions to the sector's key drivers.
Bakers disclosed that they would continue to pass on the costs to the consumers as the market conditions dictate.
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Flour companies record huge revenue
However, findings show that leading firms in the sector are recording heavier profits than the rise in their production costs, indicating they may be passing on more than the actual production costs to the consumers.
The three most prominent players in the flour business recorded a combined 45% increase in production cost of about N2.2 trillion in 2023, up from N1.5 trillion the previous year.
The recorded N2.5 trillion turnover in the review period represents a 47.2% rise from the N1.7 trillion recorded in the previous period.
According to reports, the operator sees rooted cost drivers in the sector, which causes the prices of bread and other flour-based products to skyrocket.
Operators cite reasons for price increase
Vanguard reports that Nigeria produces less than one per cent of the required wheat, showing that the local supply quantity is declining despite 20 years of operating backward integration to build local production capacity.
The report disclosed that while local output has shrunk from 10%, local consumption has increased by over 40% in the past decade.
The operators listed the challenges, including exchange rate volatility, scarcity, and the rising logistics cost caused by increased petrol prices and other energy costs.
The players also disclosed that insecurity has displaced many farmers, causing famine in some areas.
They noted that insecurity in wheat-producing areas, inadequate storage facilities and poor infrastructure have made it hard to meet local demands.
Bread prices rise over 76%
Investigation reveals that the consumer price of bread is now higher than the headline inflation.
The retail price of large-size bread rose by about 51.5% yearly, as Nigeria’s inflation rate stood at 32.15% in August 2024.
According to the report, the price is higher for the low-income category. The average price of a large size now costs about N1,500, a 76.5 yearly increase from N850 a year ago.
Bread sellers lamented that commodity prices had been on the upswing even before the increase in petrol prices.
They noted that they experienced a drop in trade and reduced their demands from the bakeries.
Nigeria is set to receive N194 billion worth of wheat
Legit.ng earlier reported that Nigeria is about to take delivery of 400,000 tonnes of durum, hard red winter and soft red winter wheat varieties worth N194 billion or $129.2 million this August.
Six vessels carrying 134,412 tonnes have already arrived at the Lagos and Calabar port terminals.
Biscuit makers and flour millers ordered the cereal from Latvia, Poland, Lithuania, the US, Argentina, and Canada.
Proofreading by Nkem Ikeke, journalist and copy editor at Legit.ng.
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Source: Legit.ng
