‘Inflation may drop to 24.48% in rebased CPI’
Nigerian headline inflation may drop to 24.48 percent, while the core inflation may drop to 22.59 percent and food inflation drop to 26.8 percent in the rebased Gross Domestic Product (GDP) figures to be released by the National Bureau of Statistics (NBS). An informed source who is close to the NBS disclosed to Daily trust […]
Nigerian headline inflation may drop to 24.48 percent, while the core inflation may drop to 22.59 percent and food inflation drop to 26.8 percent in the rebased Gross Domestic Product (GDP) figures to be released by the National Bureau of Statistics (NBS).
An informed source who is close to the NBS disclosed to Daily trust that details of the rebased CPI will be made public today.
The NBS recently rebased the CPI to replace outgoing reference periods (2009). Rebasing aligns the price and weight reference periods with the current economic environment, ensuring methodological accuracy, updating the composition of the goods and services basket, revising item weights, and incorporating necessary improvements.
It would be recalled that Nigeria’s inflation rate rose for the fourth straight month, hitting a near 30-year high of 34.8% in December 2024, up from 34.6% in the prior month. Food inflation, which constitutes more than 50% of Nigeria’s old inflation basket, eased to 39.84% in December from 39.93% the month before.
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The new inflation figures indicate a 1000 basis point drop from 34.8 to 24.4 for headline inflation. Food inflation also shed 1400 basis points, dropping from 39.93 to 26. 8 percent.
Headline inflation” refers to the overall inflation rate calculated using a standard basket of goods, including volatile items like food and energy, while “core inflation” excludes these volatile components, providing a more stable measure of underlying inflation trends by focusing on the price changes of less fluctuating goods and services.
Analysts have explained that decline in the rebased inflation does not mean the general price level is declining. The major factor responsible for the decline is the base year being closer to the current period.
Unlike in the past, where the base year was 2009, the base year for the rebased CPI is 2024. “Meaning, the NBS is comparing prices in 2025 with prices in 2024 instead of 2009. Also, the CPI baskets are not the same.”
Central banks often focus more on core inflation when making monetary policy decisions as it reflects underlying inflationary pressures better than headline inflation.
Benefits of the rebased CPI
The NBS is not only bringing the base year closer to the current period, from 2009 to 2024, but has also introduced some critical methodology changes to improve the computation processes.
The source disclosed that under the CPI, important enhancements have been made to the methodology. Some of the improvements include the transition to the latest version of the classification method, which is the Classification of Individual Consumption. According to Purpose (COICOP) 2018 Version, this new version has 13 divisions, bringing in household expenditure on Insurance and Financial Services, which now has a weight of 0.5% relative to the total household expenditure.
The source further disclosed that, “all these enhancements to the methodology in addition to the movement of the base year and price reference periods closer to the current period means, going forward, the price estimates from NBS will be much more reflective of the current inflationary pressure experienced within the economy.
“It also means that 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.”