The recent rebasing of Nigeria’s Consumer Price Index (CPI) is a significant step toward accurately tracking inflation trends. Conducted by the National Bureau of Statistics, this update includes new methodologies and an expanded range of product classifications, reflecting current consumer behaviors. The January 2025 headline inflation rate stands at 24.48%. Experts suggest further government action is necessary to address rising food and transportation costs.
The recent inflation trends in Nigeria highlight the urgent need to revise the Consumer Price Index (CPI), a key economic measure that reflects price changes for goods and services consumed by households. The National Bureau of Statistics (NBS) in Nigeria tracks this index, which is critical for determining the headline inflation rate reported monthly. The CPI framework encompasses various indices, including Urban and Rural National Indices and specific indices for essential goods such as food, services, and energy.
It is typically recommended that the CPI be updated every five years to account for shifts in consumption patterns among households and businesses. However, Nigeria has not conducted this essential rebasing process for over a decade, using 2009 as its base year. Recently, the NBS undertook the long-overdue rebasing, presenting the findings publicly on February 18, with the Statistician-General, Prince Adeyemi Adeniran, emphasizing its importance for reflecting the current economic landscape.
During the rebasing, the NBS introduced improvements to enhance the accuracy of the CPI, including updating the classification to the 2018 version of COICOP and increasing the total number of product varieties surveyed. The new methodology also excludes self-produced items and focuses strictly on monetary expenditures. This rebased CPI now captures 934 product varieties across 13 classifications, reflecting a comprehensive understanding of consumer behavior.
The NBS announced the updated All-Items Index for January 2025 as 110.7, equating to a headline inflation rate of 24.48%. This significant increase indicates that overall prices have risen compared to the previous year’s indices, driven primarily by surges in food, accommodation, and transportation costs. The rebased CPI aims to provide a clearer view of inflation trends and aid in the formulation of economic policies.
Analysts, including NBS officials, maintain that the rebasing does not signify a decrease in prices but rather a moderation in the rate at which prices are rising. CBN Governor Olayemi Cardoso mentioned that the resurgence of inflation figures influenced the decision to maintain the Monetary Policy Rate at 27.59% during their January 2025 meeting. Despite efforts to control inflation, food prices remain a focal concern for economists, who advocate for significant government action in addressing food and transport costs.
Both Prof. Uche Uwaleke and Dr. Paul Alaje have commented positively on the rebasing, recognizing it as an essential step towards understanding contemporary inflationary pressures faced by the Nigerian economy. They assert that tackling transportation and food costs is crucial for combating inflation effectively. The NBS is optimistic that the new CPI accurately reflects current consumer trends and will facilitate better policymaking to stimulate economic growth in Nigeria.
Lastly, the rebased CPI aims to enhance the accuracy of price tracking across various sectors, benefiting policymakers who need to address inflation proactively and responsively as the economy evolves.
The rebased Consumer Price Index represents a critical update for Nigeria’s economy, reflecting current consumer patterns and inflationary pressures. By incorporating improvements in methodology and expanding product variety categorizations, the NBS seeks to provide clearer insights for effective policy formulation. The persistent rise in the inflation rate emphasizes the need for government intervention, particularly in managing food and transportation costs to alleviate economic pressures on households.
Original Source: nannews.ng