The National Bureau of Statistics (NBS) has explained why Nigeria’s headline inflation rate dropped to 24.48 percent in January 2025 after rebasing.
The Statistician-General of the Federation and Chief Executive Officer of the NBS, Prince Adeyemi Adeniran, provided the explanation on Tuesday at the launch of the rebased Consumer Price Index (CPI) report
He noted that as the economy of any society or country is dynamic, it evolves over time due to innovation, development, globalization, and changes in the production and consumption patterns of goods and services. Consequently, the structure and size of the economy also change.
Prince Adeniran added that these shifts in consumer patterns lead to changes in the general composition of the basket of items used to measure the average change in price levels.
Given these factors, he explained, it became necessary to update the base year used to measure the CPI index to a year closer to the current period. He stated, “This process is commonly referred to as rebasing.”
The Statistician-General emphasized the importance of rebasing the CPI periodically, as consumption patterns change over time, necessitating updates to the items in the CPI basket
Announcing the rebased CPI results, Prince Adeniran said:
“The All-Items Index, which measures headline inflation for January 2025, stood at 110.7, resulting in a headline inflation rate of 24.48% year-on-year. This increase was primarily driven by Food and Non-Alcoholic Beverages, Restaurants and Accommodation Services, and Transport.
“The Food Index for January 2025 was 110.03, leading to a Food Inflation rate of 26.08% year-on-year.
“The Core Index, which excludes farm produce and energy, stood at 110.7 for January 2025, resulting in a Core Inflation rate of 22.59% year-on-year.
“By sector, the Urban Inflation rate was 26.09%, while the Rural Inflation rate was 22.15%.”
He also announced the inclusion of several Special Indices, such as the Farm Produce Index, Energy Index, Services Index, Goods Index, and Imported Food Index. However, he clarified that the inflation rates produced by these new indices for 2025 were not year-on-year rates like the headline rates.
Prince Adeniran explained that, since these indices are new, year-on-year rates will commence in January 2026, while month-on-month rates will begin in February 2025.
“The rates being reported here compare January 2025 with the base year, which is the average of prices in 2024. The Special Indices for January compared to the base year are as follows:
- Farm Produce: 10.50%
- Energy: 8.9%
- Services: 10.41%
- Goods: 10.79%
- Imported Food: 11.47%,” he stated.
Prince Adeniran further noted that, while this exercise should ideally be conducted every five years, it had not been done in over a decade. He emphasized that the Bureau ensured the process was rigorous, comprehensive, and inclusive, with adequate sensitization and engagement of stakeholders at every level.
Meanwhile, an economist described the rebasing exercise as an effort to reflect current inflationary pressures, which explains why the NBS has moved the reference price period to 2024.
Professor Uche Uwaleke, a specialist in Capital Market Studies, reacted to the CPI rebasing, stating:
“Against this backdrop, the development is a welcome one.
“The benefits of the rebased figures are numerous. First, they will help the government, particularly the monetary authority, make more informed decisions. The updated methodology also ensures Nigeria’s inflation figures are comparable with global standards, which can strengthen investor confidence—both foreign and domestic in the Nigerian economy.
“Now that the inflation data for January indicates weakening inflationary pressure, I expect the Central Bank of Nigeria’s Monetary Policy Committee to pause rate hikes to create room for output growth.”**
The rebasing exercise marks the culmination of a comprehensive and rigorous effort by the NBS to accurately measure the current level of price changes experienced by consumers of goods and services in Nigeria.
TRIBUNE
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