The National Bureau of Statistics (NBS) is set to release new inflation figures today, showing a sharp decline in Nigeria's headline inflation to 24.48%, core inflation to 22.59%, and food inflation to 26.8% following a major rebasing of the Consumer Price Index (CPI).
This shift comes after inflation hit a 30-year high of 34.8% in December 2024, sparking concerns about soaring prices and dwindling purchasing power. However, while the new figures suggest a significant drop, experts caution that this does not mean prices are falling—rather, it reflects a change in how inflation is measured.
Why the Drop? Understanding the CPI Rebasing
For the past 15 years, Nigeria's inflation rate was calculated using 2009 as the base year—an outdated reference point given the country's evolving economic landscape. The new rebased CPI now uses 2024 as the base year, meaning price changes are compared against more recent data rather than a much older economic period.
A top source at the NBS told Daily Trust that the new CPI also updates the composition of goods and services used to track inflation, better reflecting current consumer spending habits. One key change is the inclusion of insurance and financial services, which now account for 0.5% of the household spending basket.
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Does This Mean Inflation is No Longer a Problem?
Not necessarily. A lower inflation rate does not mean prices are going down—it only means that the rate at which they are increasing appears lower due to the new methodology. The same goods that were getting more expensive last year are still costly, but the rebased CPI provides a more realistic and updated picture of inflation trends.
Analysts note that while this shift makes Nigeria's inflation data more globally comparable, it does not immediately solve the underlying issues driving price increases—such as currency depreciation, food shortages, and rising production costs.
What Next? Impact on Policy and Business
With the rebased CPI in place, policymakers—including the Central Bank of Nigeria (CBN)—may reassess monetary policy decisions. The CBN had been tightening liquidity to curb inflation, but the new data might influence interest rate adjustments and other economic measures.
For businesses, the rebasing offers a more accurate understanding of Nigeria's inflation dynamics, helping them make better financial projections and strategic decisions.
While the new inflation figures provide some relief on paper, the reality for many Nigerians remains unchanged—high costs and economic uncertainty persist.
