The persistent rise in food prices, which hit 31.52 per cent in October, has dampened the appetite of consumers for food and beverages, forcing manufacturers to slash production by 20 percent. The manufacturers are also struggling to sell their finished goods, which have piled up by 34.03% year-on-year to N78.82 billion in the first nine months of 2023.
The inflation rate in Nigeria has soared by 5.95 percentage points to 26.72 percent in September 2023 from 20.77 percent a year ago, driven by factors such as high energy cost, insecurity, Russia-Ukraine war and others. The pump price of petrol has also jumped by 127.8 percent this year from N257.12 per litre in January 2023 to an average of N560 per litre in September, squeezing the wallets of consumers and reducing their purchasing power.
According to a report by the Central Bank of Nigeria (CBN), the capacity utilisation of food and beverage manufacturers dropped to 49 percent in the first half of 2023 from 61 percent in the same period in 2022, indicating a 20 percentage point decline. The report attributed the fall in production to low demand from consumers, who are cutting down on the quantity of food and beverages they buy.