Prices of essentials in Nigeria are reaching all-time highs. If we were to plot some of these commodities on a price chart, with price on the Y axis and time on the X axis, we would probably see a parabolic expansion higher.
The intensity of suffering heightens when the prices of everyday items suddenly fluctuate erratically.
Rice
The staple food costs anywhere between N70,000 to N75,000 per bag. Some retailers like popular store Jumia have listings for a single bag of rice for as high as N97,989.
This is almost three times the country’s minimum wage of N33,000. It is important to note that in 2019, a bag of rice sold for N17,000. This implies a 570% increase in just five short years.
This is on the upside especially for a staple that is consumed per capita of 32kg and six times the global consumption growth in Nigeria.
This is according to Pwc. By far the most consumed food in Nigeria, spikes in its price are felt and felt very fast.
Beans
From cooking as a porridge to making our local moi moi puree or the ever-reliable combo of akara (beans cake) and bread, beans are a major staple in Nigeria.
A 100kg bag of beans costs around N75,000 now. Earlier in the year, precisely in the first weeks of 2024, the staple traded for around N60,000 per bag. That represents a whooping 25% surge in price in just under two months.
Noodles
A week ago, Indomie was trending on microblogging platform X (formerly Twitter). Apparently, the Indomie belle full pack, one of their offerings, sells for N1,000. In 2019, it sold for around N400 per pack. Noodles is a very popular fast food alternative in Nigeria.
According to a 2018 World Instant Noodles Association (WINA) report, Nigeria ranks 11th in countries worldwide by noodles consumption.
Sanitary pads
According to a Premium Times article published in 2018, the price of an Always Ultra pad was N400 at the time. The same pack costs N3,000 now.
This represents an astronomic 750% increase in six years. Sanitary pads are basic and essential commodities for women and these kind of price fluctuations may be more detrimental than we actually think.
Seasonality
One may argue that the seasonality of some of these commodities like rice, beans, maize etc have affected the prices but the reality is that these prices have kept going higher despite new supply in the form of harvest.
For example, at the peak of maize harvesting in September last year, a bag of maize shot up from around N30,000 per bag to N37,000 per bag. This defied the logic of a price crash when fresh supply in the form of harvest is pumped into the markets.
Moreover, some essential commodities like toiletries, sanitary pads and noodles almost have nothing to do with seasonality. It is therefore evident that the surge in prices may have little or nothing to do with the fact that “we are out of season”. What then is responsible for the surge in prices?
Upward price discovery
Most times, Nigerians find a way to lighten a terrible situation by turning to humour. Sharing funny memes and write ups about something just to make the situation a bit bearable. In this situation, one of such writeups I found amusing was “Today’s price is not today’s price”. A play on the popular retail phrase that prices can change everyday. In our case however, to underscore how fast these prices seek upward regions, they can even change drastically intraday!
For starters, we are in a very high inflation environment. Nigeria’s inflation has been on double digit numbers indicating a fast eroding of buying power. In January, our inflation stood at 28.92%. As buying power erodes, price tremors are felt across all strata of the value chain.
For example, if the soap manufacturer discovers that the prices of raw materials have increased alongside the costs of electricity generation, he will have no choice than to increase the unit price of his goods to stay in business.
Also, we cannot end the discussion about higher prices without talking about the Naira slump. Most experts have pinned the recent price fluctuations to the fall of the Nigeria and increase in pump price of
Should I buy in bulk?
As uncertainty lurk around future prices of essentials, most Nigerians have begun to ask themselves the question whether to buy in bulk. But then, bulk is highly relative.
For someone, bulk may be a month supply of rice, or three-months stock of sanitary pads. It all boils down to the financial capability of the individual, storage capacity and priorities.
However, with the
Pros
- Cheaper prices: in a hyperinflationary environment like we find ourselves now, prices are expected to go higher. Hence, buying in bulk now almost guarantees purchasing at cheaper prices. An example would be the prices of beans as discussed earlier. If you had bought ten bags of beans in January you would have bought them cheaper.
- Cost efficient: By buying in bulk, you save yourself the cost of transportation, haulage etc that one may encounter with each trip to the market.
- Little to no downtime: Downtime is the period between when supplies finish and when they are replenished. For example, if you run short of rice and your salary is due in a week, you may have to live for a week without rice in your diet. When you buy in bulk, there’s little downtime as supplies are in excess and are probably replenished far before they finish.
Cons
- Prices could crash: Who is to say that prices can’t crash? An extreme example of such is the tulip mania in the late 1800s. Prices kept going higher and higher till they crashed. Those who bought at a premium were left holding the bag. In the case of essentials though, the buyer would consume them either way.
- Preservation problems: Some essentials are perishable. Even those that aren’t have expiry dates. For these perishables, the buyer may need to find ways to preserve them. This is risky and expensive. What happens when you find yourself with 10 bags of weevil infested beans?
- Storage issues: Not everyone has enough room to store commodities in bulk. A standard apartment in Lagos for example hardly has a sizable store room if any.
- Financial implications: Buying in bulk invariably means you must cough out more money. To buy
What happens if I have a lean budget?
According to the Picodi, an e-commerce organisation, Nigerians spend more than 50% on food every month. If this is actually the case, how then can you buy in bulk when 50% would only cover short term restocks?
To illustrate this, let’s assume Jimoh earns N150,000 and buys a quarter bag of rice every month for N20,000. After buying other items, he spends N75,000 on foodstuff alone. How would he manage to buy, say, a bag of rice in one go?
To purchase in bulk while on a lean salary or budget, you may need to dip into your savings and diligently replenish it as you receive consequent compensations.
Emphasis lies here on diligence. This is because with increasing prices, dips into savings without diligent replacement would only lead to living on the literal financial precipice a little tilt may culminate in financial ruin.
