Rebased CPI: A New Era for Inflation Tracking in Nigeria

The recent rebasing of Nigeria’s Consumer Price Index (CPI) aims to modernize inflation tracking, reflecting current economic conditions. The NBS presented these updates, which involved methodological improvements, increased product classifications, and a focus on monetary expenditures. The rebased CPI resulted in a headline inflation rate of 24.48 percent in January 2025, signaling the need for ongoing government intervention to address inflationary pressures, particularly in food and transportation sectors.

The recent rebasing of Nigeria’s Consumer Price Index (CPI) marks a pivotal change in the nation’s approach to inflation tracking. The CPI serves as a vital measure of price changes for a variety of goods and services, influencing economic indicators and policies. The National Bureau of Statistics (NBS) disclosed that this essential update, which had not occurred for over a decade, was presented on February 18 by Statistician-General Prince Adeyemi Adeniran, aiming to encapsulate the contemporary economic landscape.

The underlying components of the CPI comprise multiple indices, including Urban and Rural National Index, Food Index, Core Index, among others. The necessity for updating the CPI arises from shifting consumption patterns among households and firms, demanding a base year that accurately reflects the current market conditions. The NBS previously utilized 2009 as the base year, which no longer aligned with today’s realities.

The ambition of the rebased CPI is to incorporate new sectors and enhance data collection methods, thus improving the representation of Nigeria’s economy. The new CPI classification follows the 2018 version of the Classification of Individual Consumption According to Purpose (COICOP), expanding from 12 to 13 divisions. Notably, the updated CPI now accounts for 934 product varieties, up from 740, ensuring a more accurate tally of household expenditures.

In methodological advancements, monetary expenditures are focused on, excluding own-production and gifted items. This rebasing process was executed with rigorous data collection methods, including interviews and computer-assisted technology for real-time updating to the NBS server. Stakeholder engagements helped refine the rebasing approach and verify data accuracy.

Key findings from the rebased CPI reveal that the All-Items Index for January 2025 measured at 110.7, resulting in a headline inflation rate of 24.48 percent year-on-year. Economic analysts interpret this as a significant increase in general pricing, primarily driven by Food and Non-alcoholic Beverages. The NBS clarified that the new figures reflect inflation rates rather than a reduction in prices in the market.

In light of the rebased CPI, the Central Bank of Nigeria (CBN) maintained the Monetary Policy Rate at 27.59 percent during its first Monetary Policy Committee (MPC) meeting for 2025, indicating cautious optimism. This decision emphasizes the relevance of the new CPI metrics and their implications for economic policy. Moreover, food inflation remains a pressing issue, requiring government intervention to stabilize prices in the agricultural sector.

Economists, while supportive of the rebasing initiative, stress the imperative for the government to mitigate inflation, especially regarding food and transportation costs. They assert that reducing these expenses will be crucial in stabilizing overall inflation trends. The NBS concludes that the rebased CPI effectively captures the present inflationary pressures and consumer behaviors, aiding in better policy formulation for Nigeria’s economic growth.

In conclusion, the rebased Consumer Price Index represents a significant development in Nigeria’s economic metrics, ensuring that inflation tracking aligns with current realities. While the updated CPI presents a more accurate picture of the economy, challenges, particularly in food and transportation costs, remain. Continuous government focus on these areas, coupled with effective monetary policy guided by the new CPI, will be essential in stabilizing inflation and enhancing the overall economic landscape.

Original Source: nannews.ng