Staple food prices have spiked by 23.9 percent between 2020-2022 in sub-Saharan Africa, as dependence on food imports, consumption, and income changes weigh significantly on food prices.
In some African countries, in addition to the pass-through effect of elevated global commodity prices, other factors–domestic supply disruptions, local currency depreciation, higher fertilizer, and input costs–have led to a surge in the prices of locally sourced staples.
For Nigeria, the prices of staples like cassava and maize have risen by more than 100 percent even though they are mainly produced locally. Also, Ghana’s cassava prices escalated by 78 percent in 2020-21, mirroring higher production costs and transport constraints, in addition to other factors, according to the IMF.
Analysis by IMF disclosed that the portion of staples in food consumption and real effective exchange rates have propelled changes in local staple food prices. Furthermore, the fund (IMF) discovered that a 1 percent increase in Staple food consumption raises its local price by an estimated 1.2 percent if it is mostly imported. This is because the consumption share of each staple has the largest price effect.
IMF noted that “the relative strength of a country’s currency is another driver as it affects the costs of imported food items. We find that a 1 percent depreciation in real effective exchange rates increases the price of highly imported staples by an average 0.3 percent.”
“Staple food prices in the region are also impacted by natural disasters and wars, rising by an average 4 percent in the wake of wars and 1.8 percent after natural disasters, depending on the magnitude, frequency, duration, and location of events.”
The international lender stated that policy has a significant role to play and it stressed that countries with stronger monetary policy structures are better equipped to curtail food price inflationary pressure, which will spill over to control of overall inflation.
“Policymakers could also help make agricultural inputs such as seeds and fertilizers cheaper by introducing structural and regulatory reforms that promote fair competition, as well as by streamlining trade procedures and better leveraging research and development to boost agricultural innovation.”