Statistician-General of the Federation (SGF)/Chief Executive, National Bureau of Statistics (NBS), Mr. Adeyemi Adeniran, yesterday, announced improvements to the reporting of the Consumer Price Index (CPI), publishing some new special indices to better inform policymakers.
The development came as the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) readied to commence its two-day meeting today, the first this year, to decide on the direction of the monetary policy as well as review the state of the economy.
Expectedly, the current inflationary concerns, high cost of borrowing, and naira’s stability would dominate the committee’s deliberations.
Relatedly, Lagos Chamber of Commerce and Industry (LCCI) attributed the sharp drop in the inflation rate, from 34.8 per cent to 24.48 per cent, to the rebasing of the CPI rather than any real reduction in prices. LCCI said this in a public statement signed by its Director-General, Dr. Chinyere Almona.
The apex bank had previously raised the benchmark interest rate by a total of 850 basis points under the current leadership in efforts to subdue inflation and stabilise the naira.
Analysts urged the MPC to pause further interest rate hikes to create room for output growth following the rebasing of the CPI, which suggested that inflation was decelerating.
Adeniran, who officially announced the results of the rebasing exercise for the CPI, declared that effective immediately NBS price estimates had become more reflective of the current inflationary pressure experienced within the economy.
He said 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.”
Speaking at the unveiling of the rebased CPI estimates in Abuja, Adeniran listed the special indices to include the Farm Produce Index, which recorded 10.50 per cent inflation rate, as well as Energy, which had 8.9 per cent.
Others were Services 10.41 per cent; Goods 10.79 per cent; and Imported Food 11.47 per cent – all as of January 2025.
The NBS boss clarified that the special indices, including the rebased CPI, were not year-on-year rates, as the estimates were new.
He said the year-on-year rates would commence from January 2026, while the month-on-month rates will commence in February 2025.
As previously reported by THISDAY, the new estimates showed that headline inflation declined to 24.48 per cent in January, compared to 34.80 per cent in December, which used the old template.
CPI rebasing means updating the reference year used to gauge price levels in the country by essentially changing the basket of goods and services used to measure inflation, to better reflect current consumer spending patterns and ensure the inflation data accurately reflects the economy’s current state. It involves replacing outdated items with new ones that better represent what people are buying today.
According to the CPI figures for the period under review, the rebased food inflation stood at 26.08 per cent year-on-year in January, representing a decline in the food index when compared with 39.84 percent year-on-year recorded in the preceding month.
Similarly, the rebased core index, which excluded the prices of volatile agricultural produces and energy, stood at 22.59 per cent in January. It was 29.28 per cent in the preceding month.
The rebased urban inflation stood at 26.09 per cent year-on-year, from 37.29 per cent in December. In addition, under the rebased template, rural inflation stood at 22.15 per cent year-on-year in the review period. It was 32.47 per cent in December, when the old methodology was applied.
The SGF also clarified that the rebasing aside, figures suggested that the January inflation would have declined under the old methodology.
He explained that the rebasing process also allowed statistical offices to introduce methodological enhancements to their computation procedures and align with global best practices.
He said under the process, NBS not only brought the base year closer to the current period, from 2009 to 2024, but also introduced some critical methodology changes to improve the computation process and quality of the estimates.
He said under the CPI, important enhancements had been made to the methodology. He identified some of the improvements to include the transition to the latest version of the classification method, Classification of Individual Consumption According to Purpose (COICOP) 2018 version, from the 1999 version of COICOP.
According to him, “The new version has 13 divisions, bringing in household expenditure on Insurance and Financial Services, which now has a weight of 0.5 per cent relative to the total household expenditure.
“Another important improvement is the exclusion of own-production, imputed rents, and gifted items from the aggregates used to come up with the weights. This is because CPI is a monetary phenomenon, hence the computations should only include monetary expenditure.
“Also implemented under this rebasing is the movement of expenditures on meals away from home to the appropriate divisional class. These changes are quite significant and appropriately align expenditures to their respective classes, enabling price changes to be measured properly.”
LCCI: Drop in Inflation due to CPI Rebasing, not real Reduction in Price Levels
Lagos Chamber of Commerce and Industry (LCCI) said the sharp drop in inflation rate, from 34.8 per cent to 24.48 per cent, was due to the rebasing of the Consumer Price Index (CPI) rather than a real reduction in prices.
Reacting to the January inflation figure, LCCI explained that rebasing typically updated the weight of different goods and services in the inflation basket to better reflect current consumption patterns.
A statement by Director General of LCCI, Dr. Chinyere Almona, said the drop in inflation was because of a change in measurement rather than real decline in prices.
