You get to your favourite jollof rice spot after a long week, already picturing that steaming plate of smoky jollof rice that smells like a party and happiness. You greet the food seller, place your order, and wait for the usual price.
But when she calls the amount, you freeze. You asked if the plate of rice had an added price, and she gave you that look, like you just landed from another planet and asked if you didn’t know that fuel prices have increased.
And you stand there wondering how fuel prices from the fuel station managed to sneak into your plate of jollof rice.
Here, we break down how the increase in fuel price quietly sneaks into your plate of jollof rice and everyday necessities, and why a trip to your favourite spot leaves your stomach and your wallet feeling the heat.
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Transport Cost:
Transportation is important to businesses, from moving the raw material from the market to the warehouse and the point of sale; transportation helps make all this possible.
Another announcement that the price of fuel per litre has gone up creates a ripple effect leading to a surge in the cost of transportation, increased expenses for shipping raw materials and finished goods, which comes back to affect the customers.
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Generator Dependency:
Most businesses rely on generators due to an inconsistent power supply. As the price of fuel rises, it also puts a burden on these businesses as they have to pay more to get fuel to power their businesses.
Therefore, as the price of fuel goes up, your favourite jollof rice spot, the store next door, also increases the price to meet its expenses. Especially for businesses that deal with perishable goods like frozen foods, every hour without a power supply is like money evaporating.
They have no choice but to purchase fuel even when the price increases, and the costs will be realized from the business, leading to increased prices of goods and products.
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Chain Reaction:
As the price of fuel increases and transport fares increase, this creates a chain reaction that affects everything else, from school fees to house rent, food, and so on.
Wholesalers pay extra to transport goods to warehouses, and delivery trucks pay more for fuel, then pass the cost forward.
Businesses adjust their prices upward because materials and logistics now cost more.
The chain keeps stretching as every sector relies on movement, and movement runs on fuel.
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Supply Chain Disruption:
Increases in fuel prices can disrupt the supply chain. Some goods and products require multiple stages of transportation before reaching the final consumer; even a slight increase in the cost of fuel can cause delay and affect the timely delivery of products, which can lead to scarcity, and in turn, businesses might need to hike their prices to be able to fund the transportation cost required.
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The Psychology of Price Hike:
The cruel reality is that after the prices of fuel drop, many item prices never go back down. Once Nigerians get used to paying a certain amount, businesses rarely adjust in reverse.
Over time, customers get used to the new price, and businesses see little reason to reverse the price. It becomes less about current costs and more about the accepted value.
As the price of fuel skyrockets, the impact is not only limited to the fuel station. It doesn’t just affect bus fare prices or drivers.
Every aspect of businesses can be impacted, which affects the prices of goods and services, affecting not just those in the logistics sector, because fuel usage cuts across the board.
People and businesses depend on fuel for their daily lives, from production to trade. It serves as the vital pillar of economies. It has a significant impact on both consumers and businesses in their daily lives and operations, from transportation to supply chain disruptions.
