Onome Amuge
Global food markets ended 2025 on a softer footing, offering a measure of relief to governments and consumers still contending with the legacy of inflation, volatile currencies and geopolitical shocks. However, the apparent moderation in world food prices masks a more complicated reality for import-dependent economies such as Nigeria, where local food costs remain elevated, supply chains are vulnerable and household purchasing power continues to be squeezed.
Data released by the United Nations’ Food and Agriculture Organization (FAO) show that its Food Price Index fell for a fourth consecutive month in December, averaging 124.3 points, down from 125.1 in November and 2.3 per cent lower than a year earlier. It marked the lowest monthly reading since January 2025 and stood more than 22 per cent below the peak reached in March 2022, at the height of the post-pandemic and Ukraine war-driven commodity shock.
For the full year, however, the index averaged 127.2 points, up 4.3 per cent from 2024, underlining that the easing seen at the end of the year followed a period of sustained pressure earlier in 2025. Higher prices for vegetable oils and dairy products more than offset declines in cereals and sugar, highlighting how unevenly the burden of food inflation has been distributed across commodities and regions.
For Nigeria, Africa’s most populous country and one of its largest food importers, the distinction between global averages and local realities is critical. While international prices influence the cost of imports such as wheat, dairy products and vegetable oils, domestic factors, including exchange-rate weakness, insecurity in farming regions, high transport costs and policy uncertainty, often play a more decisive role in what consumers ultimately pay at markets
A late-year easing, led by dairy, meat and vegetable oils
The FAO said December’s decline was driven mainly by falling prices for dairy products, meat and vegetable oils, which more than offset increases in cereals and sugar. The Dairy Price Index fell 4.4 per cent from November, led by a heavy drop in butter prices as seasonally higher cream availability in Europe coincided with stock accumulation after strong production earlier in the year.
Whole milk powder prices also declined, reflecting peak seasonal milk output in Oceania and subdued buying interest from major importing regions. Skim milk powder and cheese prices eased more moderately. Despite the December retreat, dairy prices averaged 13.2 per cent higher in 2025 than in 2024, reflecting strong import demand and limited exportable supplies earlier in the year.
Dairy products continue to play an outsized role in Nigeria’s food inflation, not because households consume them heavily, per-capita intake remains low by global standards, but because the country is almost wholly dependent on imports for milk powder, infant formula and other processed dairy items. In a more stable currency environment, falling global prices would typically filter through to lower retail costs. Instead, the naira’s prolonged weakness during much of 2025 eroded those gains, leaving domestic prices elevated.
Meat prices dipped 1.3 per cent in December, with declines across all categories, particularly bovine and poultry. Lower world bovine prices reflected weaker quotations in Australia, where dry conditions prompted herd destocking, increasing cattle availability for slaughter. Poultry prices fell as bountiful exportable supplies outweighed global import demand.
Yet for the year as a whole, the FAO Meat Price Index averaged 5.1 per cent above its 2024 level, supported by firm global demand and uncertainty linked to animal disease outbreaks and geopolitical tensions. World bovine and ovine meat prices were sharply higher year on year, while pig and poultry prices declined.
Nigeria’s meat market is shaped less by international trade than by domestic supply constraints, insecurity and rising feed costs. Nonetheless, imported poultry inputs such as maize and soymeal, as well as frozen fish and processed meat products, are exposed to global price movements. The December decline offers little immediate relief where local production is disrupted by conflict and logistics bottlenecks.
Vegetable oils: a mixed blessing for West Africa
The FAO Vegetable Oil Price Index fell 0.2 per cent in December to a six-month low, as declines in soy, rapeseed and sunflower oil prices more than offset gains in palm oil. Global soyoil prices weakened on ample export supplies from the Americas, while larger rapeseed outputs in Australia and Canada weighed on prices. Sunflower oil prices fell for a second consecutive month amid sluggish import demand.
Palm oil, by contrast, edged higher, supported by expectations of seasonal production slowdowns in south-east Asia, even as Malaysia reported higher-than-expected outputs and inventories late in the year.
For 2025 as a whole, vegetable oil prices told a very different story. The index averaged 17.1 per cent higher than in 2024, reaching a three-year high amid tight global supplies.
This matters for Nigeria. Palm oil is a staple in Nigerian cooking and food processing, yet domestic production lags consumption, forcing the country to rely on imports; often unofficially, via neighbouring Benin, to bridge the gap. Higher global vegetable oil prices, combined with trade restrictions and currency pressures, have contributed to increases in the cost of cooking oil, a key component of household food budgets.
Cereal prices moved in the opposite direction in December, with the FAO Cereal Price Index rising 1.7 per cent from November. Wheat prices were supported by renewed concerns over export flows from the Black Sea region, while maize prices were buoyed by robust import demand and strong domestic ethanol production in both Brazil and the United States. Rice prices also increased across all market segments, reflecting reduced harvest pressure, improved demand and supportive policy measures.
Despite the December uptick, cereals were a bright spot in the broader inflation picture for 2025. The cereal index averaged 4.9 per cent below its 2024 level, marking its third consecutive annual decline and the lowest annual average since 2020. The FAO All Rice Price Index averaged 35.2 per cent below its 2024 level, reflecting ample exportable supplies, intense competition among exporters and reduced purchases by some Asian importing countries.
As a major importer of wheat for bread and pasta, alongside rice to supplement domestic output, Nigeria should, in principle, benefit from the recent easing in global cereal prices. In reality, the transmission has been weak. This, according to analysts, is as a result of a widening disconnect between international price benchmarks and what consumers pay locally. Staples such as bread, noodles and rice remain costly for urban households, deepening food insecurity and further straining incomes already squeezed by broader inflationary pressures.
Bucking the trend, sugar prices rose 2.4 per cent in December after three consecutive monthly declines, driven mainly by a drop in production in Brazil’s key southern growing regions. Lower sugarcane crushing and reduced use of cane for sugar tightened short-term supply. However, expectations of ample global supplies, supported by favourable production prospects in India, capped the rally.
Over the full year, sugar prices were down 17 per cent from 2024, reaching their lowest annual average since 2020. For Nigerian consumers, this global abundance has had little visible impact. Sugar is imported, often refined locally, and its retail price reflects not only global markets but also energy costs, logistics and taxes. As with other commodities, currency weakness has blunted the benefit of lower dollar-denominated prices.
Inflation, exchange rates and policy choices
The disconnect between global food price trends and the experience of Nigerian consumers points to a fundamental challenge for policymakers. Food has become an ever more significant contributor to headline inflation, laying bare structural deficiencies in agriculture, ongoing insecurity in key producing areas, and a heavy reliance on imported staples and production inputs.
FAO data indicate that global food market conditions in 2026 could prove more favourable than in the immediate post-pandemic period, particularly if supplies of cereals and sugar remain plentiful. For Nigeria, however, converting this external relief into lower domestic food inflation will require more than supportive international prices.
According to analysts, exchange-rate stability will be decisive. A weakening naira can negate the benefits of falling global prices by pushing up local costs. Strengthening foreign exchange liquidity, expanding non-oil exports and rebuilding investor confidence will therefore be essential to ensuring that movements in global food markets are more effectively transmitted to domestic prices.
Domestic agricultural productivity is considered another constraint. Despite vast arable land, Nigeria struggles with low yields, limited irrigation and inadequate storage and transport infrastructure. Insecurity in the north, where much of the country’s grain and livestock is produced, continues to disrupt supply chains. Addressing these issues, analysts say, would reduce reliance on imports and cushion consumers from external shocks.
