Nigerians may soon pay more for bread as poor purchasing power has dampened the margins of millers, forcing a hike in flour prices by five per cent.
The new price hike has already taken effects, as reports shows that a 50kg bag of flour that was sold for N10,700 two weeks ago now sells for an average of N11,200.
The Master Bakers Association says this may force bakers to increase the prices of bread or cut down the sizes of the dough when they hold a meeting on Friday to deliberate on the issue.
“The cost of production is weighing on us and there is low consumer demand. Flour millers are absorbing a lot of cost because we are conscious of the Nigeria that we live in today and the buying power” said Lanre Jaiyeola, Vice President, Flour Millers Association of Nigeria.
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“There are issues of wheat prices which account for most of our production cost, cost of interest rate and exchange rate as well as low purchasing power and of these dynamics affect the eventual production”, Jaiyeola added.
According to him, Flour Millers need to survive and by surviving we need to be profitable substantially, stressing that the situation has made the association to increase the price of a bag of flour by N500. The evidence of the above shows in the financial statements of listed flour mills in the country.
For the year ended December 2018, Dangote Flour Mills posted a loss of N1.15 billion, from a profit of N15.13 billion the previous year which shows a 92 per cent decline in profit.
