Low inflation figure may result in policy complacency – Alaje

Dr. Paul Alaje, Chief Economist at SPM Professionals, in this interview with Daily Trust warned against policy coordinators relaxing their effort to improve the economy as a result of the rebased consumer price index. Excerpts: Were you surprised at where we landed with regards to the new inflation numbers after rebasing the CPI? First of […]

Dr. Paul Alaje, Chief Economist at SPM Professionals, in this interview with Daily Trust warned against policy coordinators relaxing their effort to improve the economy as a result of the rebased consumer price index. Excerpts:

Were you surprised at where we landed with regards to the new inflation numbers after rebasing the CPI?

First of all, I am not surprised that we saw a reduction. The safest haven for the government is 2024 as the base year. It’s the safest. It’s important for people to know what happened, what the Bureau of Statistics announced was not a reduction in inflation.

Inflation did not reduce from what happened in December 2024 to January 2025. What we did was that we changed the goalposts. There are two different things. Now, when you change the goalposts, perhaps you make it smaller or you make it bigger.

The bureau is saying that they’ve noticed that perhaps using the reference point of 2009 is not sufficient, that we need to make it closer to a reality.

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 But what really happened in the real sense of it? I’ll tell you. There was economic prosperity in 2009 compared to 2024.  Since 2009, we have seen COVID-19. We’ve seen a major economic error in economic decisions by closing the border, which was a big error. We have also seen that after 2009, the level of insurgency had an impact on food inflation which soared. We have also seen that there was war in Ukraine, that’s Ukraine-Russia war that has happened in more recent times.

As you noticed that it is as though Nigeria was never going to come out of high inflation, the moment we crossed 33%, we became a major inflationary nation and as a major inflator, we were inching towards 40% that may result in being referred to as a hyperinflation nation. The trajectory was becoming more difficult. What can we do to make the number look better? So what we saw was a change of our reference year. Nations do it.

So the Bureau of Statistics have referenced 2024. So, if you go to the market, are you going to see an average of 10% drop? The answer is no. Perhaps, if you go to the market this morning, the price will still go up. It’s not that your house rent will drop. That’s not what it’s saying.

What it’s saying is that we have changed the parameter. So, if you are comparing last year, December, to this year, are you expecting a similar report or result to happen? No. Because the number at the end of the day is not saying the same thing.

People may see the report as deceitful, untrue and all of those. So I think the NBS, although they are doing this, are trying to invest in public education.

But I think they need, and government will need to give more money to that agency to actually provide more education to Nigeria beyond those of us who speak big English, they need to look for those who can also speak across languages, in Hausa, in Yoruba, in Igbo, in Efik, in Ibibio, so that people understand that, listen, we understand that the problems are still there, nothing has changed in terms of economic reality.

If anything, poverty increased more. But this is where many Nigerians have issues. The president and those who have spoken for governments across the world, I’ve read virtually all of them. They have an expectation of 15 per cent. For people to trust numbers, we have to be careful. People are thinking that, oh, the government is now working to the answer.

I remember when I was in secondary school, we called it ‘Wuruwuru to the answer’. So people are thinking, oh, the government already has a chart, we are working to achieve 15 percent. My worry is that we need to be very careful.

NBS is an organisation that has a lot on its neck, I know there are political pressures, but the organisation is very central to our national development.

What do you think the new numbers signpost for us going forward?

When your inflation is lower, tendencies are high that trust would improve. But when your inflation pressure is high, tendencies are high that foreign and local investors will be afraid to invest because they will think that inflationary pressure will wipe away their gains.

That perhaps is what I see as a benefit, other than that, the chances are high that those who should help the economy improve in terms of coordination will relax and that things are better. Like we have seen in the case of unemployment numbers.