Recently, a report from the Nigerian Bureau of Statistics indicates that Nigeria’s inflation rate has jumped, driven by rising food prices.
The inflation rate rose to 13.71% in September 2020, an indication that it is 0.49% point higher than 13.22% the country saw in August 2020.
This was also contained in the Consumer Price Index (CPI) report, released by the National Bureau of Statistics (NBS).
According to the report, Nigeria has battled with a consistent increase in its inflation rate which grew in January at 12.13% rate to 13.71% in September, this has been the highest the country has seen in the last 30 months.
A component of the inflation index also rose in September 2020 by 16.66%, while the food sub-index increased by 1.88% in August 2020.
However, the increase in the food index was a result of rising in prices of Meat, Fish, Fruits, Bread,
Yam and so on.
In a brief chat with Onyekachi Izukanne, Co-founder and CEO of TradeDepot, the B2B eCommerce platform for consumer goods in Africa, he explored the challenges and opportunities of rising inflation for the retail sector in Nigeria.
The latest figures from the NBS show that Nigeria’s inflation rate has increased to 14.23%, driven by rising food prices.
“With restrictions on the movement of goods, forex liquidity pressures, and a number of other challenging factors throughout the last two quarters, the effects have been largely felt by consumers, affected by rising costs of living and lowered earnings.
“Additionally, the doubleheader of shrinking personal incomes for consumers and the rise in inflation rate creates a tricky landscape to navigate for both consumer goods manufacturers and retailers.
“Drawing a parallel to the last time the country experienced a similar situation in 2016/2017, this could create opportunities for challenger value brands and new market entrants in essential product categories such as toiletries, as price-conscious consumers become more eager to experiment with new, lower-priced products.
““Access to credit facilities will be more pertinent than ever, as retailers look to ensure their stock levels remain steady as well as affordable for their customers; particularly as consumer spending is expected to continue rising in the coming festive season”, Onyekachi noted
The inflation rate will affect businesses and startups, especially in this COVID-19 period.
The spike in the inflation rate presents opportunities and challenges for businesses across the country.
“For businesses in the retail space, the combination of shrinking personal incomes and rising inflation makes running a successful business more difficult as this means less money for consumers to buy more expensive products.
“The pandemic has also presented an opportunity for store owners to increase their turnover and business performance.
With restrictions on movements, people are spending more time at home and keeping things relatively local which means retail store owners have a more pivotal role to play in providing access to essential goods.”, Onyekachi further explained
According to Onyekachi, Nigeria has seen a surge in users during the pandemic as store owners explore new ways to access the stock they need.
Many store owners usually go to the outdoor markets to purchase their products but with restrictions on movement and general hesitation to mingle in crowds, they are more open to exploring different ways
to access goods for their shops.
“As a company, we are committed to making the process of accessing supplies more convenient for even the most remote store owners and make it easier for them to run a successful business, and it is great to see store owners responding to that,” he added
Finally, with retailers increasingly preferring smaller case configurations to enable them to diversify their product portfolio with the same amount of working capital, product packaging should be a key consideration for manufacturers.
“Looking ahead, the outlook for 2021 will be similarly challenging as Nigeria continues to battle various macro headwinds, and arguably, small retailers will matter even more as they continue to keep the engine of the economy steadily ticking.”, Onyekachi concluded
Featured Image: Onyekachi Izukanne, Co-founder/ CEO, TradeDepot
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