Financial Analyst, David Olujinmi, has explained that the Jollof Index serves as a practical, street-level measure of inflation in Nigeria by tracking the cost of everyday food items used in preparing Jollof rice.
Speaking during an interview with ARISE NEW on Thursday , Olujinmi said the index reflects how food prices continue to drive inflation across the country.
“The pot of Jollof represents one of the most inclusive meals Nigerians eat. Across all 36 states and 774 local governments, rice especially Jollof rice is a staple almost everyone consumes. So, we’ve developed a street-level inflation report that tracks food prices, which remain the main driver of inflation in the country.”
“They make up a large portion of our inflation basket. So, we adopt that same approach and go into markets across eight states in the country. We focus on key everyday items such as tomato, pepper, onions, rice and essential condiments, including proteins like chicken, turkey, and fish. This allows us to track the full range of inputs people use in making Jollof rice.”
“It just gives us a broad, streamlined, on the spot assessment of inflation in the country.”
On the connection between global oil prices and local food inflation, Olujinmi said Nigeria lacks protective buffers against external shocks.
“Rather, what we have now is a situation where there are no guardrails protecting Nigerians from the impact of rising global oil prices. Whether it happens in Venezuela or as we’ve seen with tensions involving Iran, the effects are quickly felt here at home. For instance, the cost of transporting a tonne of grain from Kano to Lagos rose from 50,000 to 75,000 between October and the period under review.
“That’s about, that’s a 50% rise because the cost of diesel has increased. Right now, I’ve seen diesel at 2,000. By the time we’re tracking the reports, it was about 1,500.”
“This is coming from a period in October when diesel was around ₦1,000. We’ve seen a very direct impact since then. Whenever diesel or fuel prices rise especially diesel, since most trucks that transport agricultural goods run on it ,the effect is immediately felt across the supply chain.”
“From the price of diesel to transportation costs, and ultimately to market prices, the impact is direct and far reaching.
On policy failure and Nigeria’s vulnerability to global shocks, he stressed the need for intervention mechanisms.
“The essence of that statement is to highlight that Nigeria currently lacks policy mechanisms to protect itself from global developments
“There needs to be government and policy intervention, as we cannot predict what will happen tomorrow or in the years ahead.”
“Anything is possible. Anything can happen.”
“Because consumption makes up a large share of GDP. When people are unable to consume, government revenue from taxes is also affected, and the entire economy feels the impact”.
“There is therefore a need to develop systems that can protect the consumer, especially the average person on the street.”
On regional disparities, Olujinmi stated that Rivers State recorded the sharpest increase in prices.
“From our report, the people who experienced the highest price pressure were in Rivers State”.
“We recorded a 55% increase from October last year to March this year, based on our data”.
In the North, part of the pressure is driven by ongoing farmers’ clashes, which have disrupted agricultural activity.
In the South, the major pressure point is rising logistics costs.”
Comparing Nigeria with Ghana, he said Ghana’s relative stability has helped moderate inflation.
“Ghana is currently in a situation where food inflation is very low, around 2.2% as of April”.
They are enjoying a level of price stability.
They also have the advantage of significant food imports.
“They import from Nigeria, Burkina Faso, Togo, and Benin Republic, so import dependence plays a role in their market stability.”
On policy solutions, Olujinmi called for stronger fiscal buffers and stabilisation mechanisms.
“One of the approaches to reducing food prices is one thing, but more importantly, Nigeria needs to create guardrails that protect citizens from sharp increases in food prices. This includes considering dollar reserves.
We used to have mechanisms like an equalisation fund in the past.
The government needs to revisit ideas like that as shock absorbers.
“Such funds can help stabilise pump prices and cushion Nigerians on the streets when global shocks occur”
“Petroleum reserves also need to become part of the conversation at this point.”
He concluded that stronger policy coordination is essential to protect consumers from external economic shocks.
Goodness Anunobi
