Nigeria’s Consumer Price Index (CPI) has been rebased for the first time in over a decade, updating the base year from 2009 to 2024 to better reflect current consuming patterns and inflationary pressures. The NBS has introduced updated methodologies and categories in the CPI framework to improve accuracy in inflation tracking. The rebased CPI reports a current headline inflation rate of 24.48%, driven primarily by increases in food and transportation costs, prompting ongoing efforts by the government to address these issues.
The recent rebasing of Nigeria’s Consumer Price Index (CPI) marks a significant advancement in inflation tracking within the nation. Traditionally, the CPI is a measure that monitors the average price changes of a diverse basket of goods and services that households consume. It is a crucial indicator of inflation, reflecting the year-on-year price variations reported monthly by the National Bureau of Statistics (NBS), which had relied on 2009 as its base year until now.
Rebasing occurs every five years to align with evolving consumption patterns among households and businesses. This process updates the base year closer to the present to ensure the CPI accurately depicts current economic inflationary pressures. Unfortunately, Nigeria has not conducted such an essential rebasing exercise in over a decade, prompting the necessity for this recent action.
The NBS introduced the rebased CPI results on February 18, presented by Statistician-General Prince Adeyemi Adeniran. The rebasing seeks to align Nigeria’s economic indicators with its current structure, updating consumption baskets and improving data collection methods. Given the dynamic nature of economies, this adjustment is critical to representing the changing landscape of consumer behavior and economic conditions.
Adeniran provided context for the rebased CPI, discussing how innovations, globalization, and shifting consumption practices necessitate an updated methodology. With the new base year set to 2024 and a reference weight period of 2023, the rebased CPI now categorizes 934 products into 13 divisions based on the 2018 Classification of Individual Consumption According to Purpose (COICOP). Notably, the new classification introduces categories for financial services and improves the breadth of the product variety.
The rebasing also signifies a methodological enhancement that reflects global best practices and excludes certain expenditures that do not align with monetary spending. These changes are intended to provide a clearer picture of spending habits and facilitate more effective economic analyses. The effort involved significant stakeholder engagement to ensure comprehensive and accurate data collection through various methods.
The results of this rebasing show an All-Items Index for January 2025 at 110.7, resulting in a headline inflation rate of 24.48 percent, contrasting a previous rate of 29.90 percent in January 2024. Analysts attribute the current inflation increase primarily to food costs and transport, emphasizing that the rebased figures illustrate changes in price dynamics rather than reductions in overall prices.
The Federal Government continues to implement policies aimed at addressing inflation, particularly concerning food availability and transportation costs. Economists, while praising the rebasing process, stress the urgency of tackling persistent issues in food price inflation to foster economic stability. Prominent voices like Professor Uche Uwaleke and Dr. Paul Alaje highlight the importance of reducing transportation costs and infrastructure improvements for managing inflation effectively.
The NBS remains optimistic about the implications of the rebased CPI for accurately tracking inflation and informing policy decisions. This updated methodology is seen as a step toward creating a clearer understanding of economic conditions and consumption patterns within Nigeria, facilitating better governance and economic growth strategies.
The recent rebasing of Nigeria’s CPI represents a crucial update that aligns economic indicators with contemporary realities, following a decade without such changes. It emphasizes the need for accurate monitoring of inflation, essential for responsive governmental policies. While inviting improvements to data accuracy, the rebased CPI highlights ongoing challenges in managing food and transportation costs, crucial areas the government must address to stabilize inflation and enhance economic performance.
Original Source: nannews.ng
