High fuel and fertiliser costs contributing to food inflation in Africa

In line with global trends, food price inflation remains high in most of Africa, according to the latest World Bank Food Security Update. In August 2022, Zimbabwe recorded Africa’s highest food price inflation of 353% (compared to the same month in the prior year), while other countries with elevated food inflation include Ethiopia (36% in July) and Rwanda (34.4%).

Since the World Bank’s last update issued on 11 August 2022, the global cereal price index has increased by eight points. Global wheat, maize and rice prices are 17%, 29% and 6% higher, respectively, than in September 2021. Although the partial reopening of Ukraine’s Black Sea ports relieved pressure on food markets, weather-related concerns began to arise in the second half of August. Therefore, although international prices of wheat and maize fell month to month in July, by 15% and 11%, respectively, the price drop has already slowed for wheat and stopped for maize.

Meanwhile, fertiliser markets remained volatile, especially in Europe, where tight natural gas supplies and high prices have caused many producers of urea and ammonia to stop operations. Next season’s fertiliser application rates could thus decrease. Although prices for all fertiliser types remain higher than a year ago, there are some variations. Prices for nitrogen fertilisers increased in August, while prices for other fertilisers remained mostly stable or even decreased, following seasonal low demand.

Staple food prices in East and Southern Africa increased in most markets because of a decrease in stocks and other local characteristics. August year-on-year food price inflation was 15.3% in Kenya, 7.8% in Tanzania, 11.4% in Zambia and 17.3% in Mozambique. Maize prices increased atypically in countries such as the Democratic Republic of the Congo, Mozambique and Tanzania because of below-average production as a result of drought and high fuel and fertiliser outlays. Currency depreciation and reduced hard currency reserves exerted further upward pressure on prices. The situation is particularly precarious in the Democratic Republic of Congo and Ethiopia, with up to 10 million and 15 million people facing risk of acute food insecurity, respectively.

In North Africa, food prices keep increasing because of global supply chain disruptions. In Tunisia, food price inflation reached 11.9%, which drove overall inflation to 8.6%, the highest since 1991. Some imported food items that the government regulates – including rice, sugar and vegetable oil – are unavailable in the market because of rising costs and transportation disruptions. Morocco and Egypt’s food were 12% and 22.4% higher, respectively, in July than at the same point last year. Combined with the impact of the Russia-Ukraine war, water stress chronically threatens food security in the region. Water stores behind dams in Tunisia are currently only 34% full, compared to an average of 47% full at this point in the year over the past three years. Morocco’s cereal production this year was exceptionally low, harvesting only 33% of the previous year’s yield because of the serious drought and inadequate rainfall.

Against a backdrop of high global food, fuel and agricultural input costs, staple food prices in West Africa remain well above the five-year average. Food price inflation was 22% in Nigeria in July, while Ghana, Côte d’Ivoire and Senegal recorded figures of 32.3%, 9% and 17.2%, respectively, in the same month. In the Sahel, high prices stem from the early depletion of food stocks from last season, increased replenishment needs, various national restrictions on cereal outflows, and continued civil insecurity, particularly in the Lake Chad basin and the Liptako-Gourma region, which borders Mali, Burkina Faso, and Niger. In the coastal countries, continued currency depreciation and sharply rising import costs are the main causes of high prices. With the harvest season approaching, food security is expected to improve slightly across the region after October.