Statistician-General of the Federation (SGF)/Chief Executive, National Bureau of Statistics (NBS), Mr. Adeyemi Adeniran, on Tuesday, announced improvements to the reporting of the Consumer Price Index (CPI), publishing some new special indices to better inform policymakers.
The development came as the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) readied to commence its two-day meeting on Wednesday, the first this year, to decide on the direction of the monetary policy as well as review the state of the economy.
Expectedly, the current inflationary concerns, high cost of borrowing, and naira’s stability would dominate the committee’s deliberations.
Relatedly, Lagos Chamber of Commerce and Industry (LCCI) attributed the sharp drop in the inflation rate, from 34.8 per cent to 24.48 per cent, to the rebasing of the CPI rather than any real reduction in prices. LCCI said this in a public statement signed by its Director-General, Dr. Chinyere Almona.
The apex bank had previously raised the benchmark interest rate by a total of 850 basis points under the current leadership in efforts to subdue inflation and stabilise the naira.
Analysts urged the MPC to pause further interest rate hikes to create room for output growth following the rebasing of the CPI, which suggested that inflation was decelerating.
Adeniran, who officially announced the results of the rebasing exercise for the CPI, declared that effective immediately NBS price estimates had become more reflective of the current inflationary pressure experienced within the economy.
He said in terms of the quality of the process and soundness of the estimates, “NBS data will be among the top, and comparable to any other in Africa and, indeed, across the globe.”
Speaking at the unveiling of the rebased CPI estimates in Abuja, Adeniran listed the special indices to include the Farm Produce Index, which recorded 10.50 per cent inflation rate, as well as Energy, which had 8.9 per cent.
Others were Services 10.41 per cent; Goods 10.79 per cent; and Imported Food 11.47 per cent – all as of January 2025.
The NBS boss clarified that the special indices, including the rebased CPI, were not year-on-year rates, as the estimates were new.
He said the year-on-year rates would commence from January 2026, while the month-on-month rates will commence in February 2025.
As previously reported by THISDAY, the new estimates showed that headline inflation declined to 24.48 per cent in January, compared to 34.80 per cent in December, which used the old template.
CPI rebasing means updating the reference year used to gauge price levels in the country by essentially changing the basket of goods and services used to measure inflation, to better reflect current consumer spending patterns and ensure the inflation data accurately reflects the economy’s current state. It involves replacing outdated items with new ones that better represent what people are buying today.
According to the CPI figures for the period under review, the rebased food inflation stood at 26.08 per cent year-on-year in January, representing a decline in the food index when compared with 39.84 percent year-on-year recorded in the preceding month.
Similarly, the rebased core index, which excluded the prices of volatile agricultural produces and energy, stood at 22.59 per cent in January. It was 29.28 per cent in the preceding month.
The rebased urban inflation stood at 26.09 per cent year-on-year, from 37.29 per cent in December. In addition, under the rebased template, rural inflation stood at 22.15 per cent year-on-year in the review period. It was 32.47 per cent in December, when the old methodology was applied.
The SGF also clarified that the rebasing aside, figures suggested that the January inflation would have declined under the old methodology.
He explained that the rebasing process also allowed statistical offices to introduce methodological enhancements to their computation procedures and align with global best practices.
He said under the process, NBS not only brought the base year closer to the current period, from 2009 to 2024, but also introduced some critical methodology changes to improve the computation process and quality of the estimates.
He said under the CPI, important enhancements had been made to the methodology. He identified some of the improvements to include the transition to the latest version of the classification method, Classification of Individual Consumption According to Purpose (COICOP) 2018 version, from the 1999 version of COICOP.
According to him, “The new version has 13 divisions, bringing in household expenditure on Insurance and Financial Services, which now has a weight of 0.5 per cent relative to the total household expenditure.
“Another important improvement is the exclusion of own-production, imputed rents, and gifted items from the aggregates used to come up with the weights. This is because CPI is a monetary phenomenon, hence the computations should only include monetary expenditure.
“Also implemented under this rebasing is the movement of expenditures on meals away from home to the appropriate divisional class. These changes are quite significant and appropriately align expenditures to their respective classes, enabling price changes to be measured properly.”
LCCI: Drop in Inflation due to CPI Rebasing, not real Reduction in Price Levels
Lagos Chamber of Commerce and Industry (LCCI) said the sharp drop in inflation rate, from 34.8 per cent to 24.48 per cent, was due to the rebasing of the Consumer Price Index (CPI) rather than a real reduction in prices.
Reacting to the January inflation figure, LCCI explained that rebasing typically updated the weight of different goods and services in the inflation basket to better reflect current consumption patterns.
A statement by Director General of LCCI, Dr. Chinyere Almona, said the drop in inflation was because of a change in measurement rather than real decline in prices.
Almona stated, “The previous method likely overemphasised food inflation, while the new approach incorporates updated economic data and adjusted weightings.
“This difference does not indicate a sharp fall in prices but a revised way of calculating inflation. Despite the lower reported rate, inflation remains high, meaning prices are still rising, just at a slower pace.”
She said a lower inflation rate seemed positive, but it did not automatically improve living standards.
According to her, “Prices are still rising, wages remain stagnant, and unemployment is high, keeping real incomes under pressure.
“The rebased inflation rate only reflects a different measurement, not an actual drop in prices.
“For most Nigerians, essential costs, like food and transportation, remain high, meaning living conditions will not improve unless there is a real reduction in the cost of necessities.”
Almona said the rebased inflation rate would provide policymakers with a clearer view of economic trends without resolving the rising cost of living.
She advised that the government must implement targeted interventions to address inflationary pressures and improve economic stability.
The LCCI director-general stated, “One key priority is tackling food inflation, which accounts for over 50 per cent of price increases. Policies should focus on boosting agricultural productivity, reducing post-harvest losses, and improving transportation and storage infrastructure to ensure food affordability.
“Stabilising the exchange rate is crucial, as Naira devaluation has been a major driver of inflation. Encouraging local production and reducing reliance on imports can help strengthen the currency and control price surges.”
LCCI added that fiscal discipline was essential, as excessive government borrowing and deficit spending contributed to inflation.
It said, “Reducing unnecessary expenditures while prioritising infrastructure and social investments can help manage inflationary pressures.
“At the same time, the Central Bank of Nigeria (CBN) must carefully adjust monetary policies, ensuring interest rate decisions strike a balance between controlling inflation and sustaining economic growth.”
A financial expert and President of the Capital Market Academics of Nigeria (CMAN), Professor Uche Uwaleke, in reaction to the inflation rebasing said, “Now that the inflation number for January has provided evidence of weakening inflationary pressure, I expect the Monetary Policy Committee of the CBN to pause rate hikes to create room for output growth.” Against this backdrop, Uwaleke said the development was welcoming.
Uwaleke, who is Director, Institute of Capital Market Studies, Nasarawa State University, told THISDAY that the exercise was primarily meant to reflect current inflationary pressure, which explained why NBS moved the reference price period to 2024.
The former Commissioner for Finance in Imo State said, “The benefits of the rebased number are several. First, it will help the government, especially the monetary authority, to make more informed decisions.
“It makes our inflation number comparable with the rest of the world since it is based on standard and updated methodology.
“This can place both foreign and domestic investors in a stronger position to make investment decisions in favour of Nigeria.”
Managing Director/Chief Executive, SD&D Capital Management Limited, Mr. Idakolo Gbolade, said he expected CBN to make a hold decision, especially with the current rebasing of inflation, which had significantly reduced.
Gbolade added that there was no point further tightening monetary policy, given that measures previously taken by MPC were already strengthening the naira.
He said the manufacturing sector was “seriously groaning from continuous MPR rate increases and a hold decision will bring reprieve to the economy”.
Centre for the Promotion of Private Enterprise (CPPE) also clarified that a drastic reduction in inflation figures was not tantamount to a reduction in price level.
Founder/Chief Executive Officer of CPPE, Dr. Muda Yusuf, made the clarification yesterday in his comments on the January inflation figures that showed a drop in food inflation from 39.8 per cent to 26.08 per cent, and decline in core inflation from 29.28 per cent to 22.59 per cent within the period under review.
Yusuf stated that the drastic deceleration in inflation should be cautiously celebrated.
He said, “The reality of high prices has not changed and remains a major factor in the cost of doing business, cost of living and poverty equation in the country.
“Households and firms are still concerned about high energy costs, the strength of the naira, high interest rate, cost of imports, transportation costs and insecurity.
“It is hoped that the government will recalibrate its strategies to address these major cost drivers.”
Yusuf said what businesses and households desired at this time was a reduction in the general price level, from the incredibly high levels in 2024 to a substantial moderation in 2025, defined in technical parlance as disinflation.
He added, however, that the good news was, “We are beginning to see indications of such reductions in PMS, diesel, some food items and pharmaceutical products.
“It is hoped that this trajectory will be sustained in the course of the year.”
Yusuf pointed out that the sharp deceleration of headline inflation rate in January did not come as a surprise given the review of the computation base year from 2009 to 2024.
He stated that there was additionally a strong base effect on the inflation figures given the high inflation regime in 2024, which had a considerable effect on the year-on-year inflation outcomes.
Yusuf said, “Besides, transaction demand in December 2024 was typically much more intense because of the festivities while the spending momentum in January was predictably much slower because of lower disposable incomes following intense spending in the previous month.
“These are some of the explanatory factors for the sharp deceleration in the inflation numbers in January 2025.”
Ndubuisi Francis, James Emejo and Dike Onwuamaeze
