As of March 2022, diesel prices increased by N60 per litre compared to this time last year. This increase is due in part to the impact of the pandemic, and the sanctions imposed on Russia by the United States and the European Union, due to the conflict in Ukraine. The sanctions have caused a lack of investment in the region, which has led to a decrease in production.
The cost of diesel has had a knock-on effect on the prices of food items. For example, last year it cost N227,760 to fill a 1000 litre tank, but the cost of diesel today was N288,090 – an increase of N60,330 per tank. This increase in cost is unfortunately transferred to the consumer through price increases.
Vendors forced to sell their produce at a higher price.
Nigeria, Africa’s largest country for oil production and food production, has been under intense pressure due to having to spend more on diesel to power their facilities and on on-going related costs. The combination of high oil prices and increased costs due to the diesel price increase is putting a lot of pressure on businesses in these sectors.
There is an expectation for another spike in food prices according to the Federation of Agriculture Commodity Association of Nigeria (FACAN). The high cost of diesel is making it difficult for farmers to transport their goods to market, and as a result, they are being forced to sell their produce at a higher price. This is likely to have a ripple effect throughout the food chain, resulting in higher prices for consumers.
Increasingly difficult to obtain the basic necessities.
The prices of food and other essential items began experiencing a rapid increase in Nigeria since the borders were closed down in August 2019. Additional measures where also taken for border closure but this was in response to the Covid-19 pandemic, as it caused a disruption in the supply chains of the country. The border closures and consequent interruptions in the supply of goods have resulted in an increase in prices of essential items, including food.
The increase in diesel prices has had a significant impact on transportation costs, which in turn has led to a doubling of prices for commodities. This is already having an effect on inflation, as the cost of goods becomes increasingly more expensive and out of reach for the average Nigerian. This makes it increasingly difficult for people to obtain the basic necessities they need to live a healthy life. As a result, many people are being left behind.
Largely due to the depreciation of the Naira.
Inflation in Nigeria is expected to reach 13.6% in 2022, and an additional 11.8% in 2023. This is largely due to the depreciation of Nigeria’s currency (Naira). The depreciation of the Naira makes imports more expensive, leading to an increase in the cost of goods and services. Additionally, the Central Bank of Nigeria has been unable to keep inflation under control, and the country’s economy is struggling.