Impact Of Food Price Inflation On Household Consumption In Nigeria

Abstract

Food price inflation poses a serious threat to household welfare and food security in Nigeria, where a significant proportion of household income is spent on food consumption. Despite the country’s abundant agricultural resources, persistent inflation driven by high production costs, exchange rate depreciation, insecurity, and inadequate infrastructure has intensified food insecurity. This study investigates the impact of food price inflation on household food security in Nigeria. The study is anchored on Cost-Push Inflation Theory, Demand-Pull Inflation Theory, and Amartya Sen’s Entitlement Theory of Food Security. A quantitative econometric research design was adopted, utilizing Ordinary Least Squares (OLS) regression and Structural Equation Modeling (SEM) to analyze secondary data obtained from the Central Bank of Nigeria (CBN), National Bureau of Statistics (NBS), and the World Bank covering the period 2000–2023. The findings reveal that inflation significantly increases food prices, while rising food prices and declining household income substantially reduce food security levels. The SEM results further indicate that inflation affects food security both directly through the erosion of purchasing power and indirectly through food price transmission mechanisms. The study concludes that food price inflation worsens food insecurity, particularly among low- and middle-income households. The study recommends increased agricultural productivity, exchange rate stabilization, reduction of production costs through input subsidies, improved rural infrastructure, and targeted social protection programmes to mitigate the adverse effects of food price inflation on household food security in Nigeria.