Inflation triggers 40% jump in raw materials cost

In apparent reflection of the high inflationary pressure across the country, the cost of raw materials for consumer goods rose sharply by 40 per cent in 2021, but with little impact on the profitability of producers.


Since 2020, Nigerians have been battling with persistent increase in prices of goods and services, aggravated by insecurity, naira depreciation and supply chain disruption caused by the COVID-19 pandemic.

Data from the Nigeria Bureau of Statistics, NBS, showed that average annual inflation rose to 13.2 per cent in 2020 from 11.39 per cent in 2019, indicating 181 basis points increase.

This trend aggravated in 2021 as average annual inflation rose further by 378 bpts to 16.98 per cent.

The severity of this trend is reflected in the increased cost of producing consumer goods, which are mostly essential commodities used regularly by consumers. These include packaged food, toiletries, beverages, stationery, over-the-counter medicines, cleaning and laundry products, plastic goods, and personal care products.

Consequently, the ratio of raw materials cost to total cost of sales for the seven companies rose to 78.3 per cent in 2021, up from 74.6 per cent in 2020, representing a 3.7 percentage point increase. Similarly, the companies spent more of their revenue on raw materials in 2021. The companies’ spent 55.9 per cent of their revenue in 2021 on raw materials procurement, up from 49.8 per cent spent in 2020, indicating a 6.1 percentage increase

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