With the release of the rebased consumer price index (CPI), which measures the rate of inflation, last week, the National Bureau of Statistics (NBS) has effectively brought to an end an era of high inflation figures.
There has been high expectations since when the NBS announced in October last year that it was working to rebase the gross domestic product (GDP) and the consumer price index (CPI) to reflect the current econonic realities in the country.
Originally scheduled for release by the end of January 2025, it was however delayed ostensibly to allow the presidency have a good look at the figures before it was made available to the public.
Not dissapointing the speculations that the whole idea of rebasing was to come up with a figure favourable to the administration, the new inflation figures jumped from 34.80 per cent in December 2024 down to 24.48 per cent in January and food inflation also nosedived to 26.08 per cent in January 2025 from 39.84 in December 2024.
Recall that the government had earlier projected an inflation rate of 15 per cent for 2025, a projection many economists said would be an uphill task given the rate at which prices of goods and services are rising in the country.
This is even more so as the driving factors of inflation which include, high energy cost, insecurity, fluctuation of the exchange rate as well as high food costs are still prevalent in the country.
It is clear that the government wants to use rebasing to present an illusion of progress and mislead domestic stakeholders and international observers.
Nigeria has witnessed consistent rise in headline and food inflation over the last four years but it reached a cresendo in June 2023 with the removal of fuel subsidy and subsequent floatation of the naira by the new government of President Bola Tinubu.
Prices skyrocketed in response to the increase in the cost of fuel and the cost of imported goods.
Since then, the inflation rate has maintained a steady rise leading to high cost of living and sparking off hunger protests across the country last year.
The Central Bank of Nigeria has tried without much success to force down the galloping inflation by consistently hiking the interest rate, a measure it believed will reduce money in circulation, because it erroneously believed that the driver of the inflation was too much money in circulation.
Specifically, the CBN raised the Monetary Policy Rate (MPR) consistently six times in 2024, with hikes in February, March, May, July, September and November. The MPR was increased from 18.75 per cent to 22.75 per cent in February, then to 24.75 per cent in March, 26.25 per cent in May, 26.75 per cent in July, 27.25 per cent in September and 27.5 per cent in November.
Experts have criticised this hike in interest rates which they say is actually contributing to inflation.
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf,
a strong voice on issues relating to the economy, said the CBN needs to address supply-side issues such as foreign exchange shortages, insecurity, and weak purchasing power, rather than just relying on interest rate hikes.
Even the International Monetary Fund (IMF) at a time cautioned the CBN that its high interest rate policy could actually end up fueling inflation, rather than curbing it, a position that was recently echoed by the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele.
At the meeting of the Monetary Policy Committee (MPC) of the CBN which was held last week, expectation was that there might be another hike in interest rate. But this changed with the new inflation figures just released by the NBS.
Obviously responding to the outcome of the rebased CPI, the CBN’s Monetary Policy Committee at the end of its meeting retained the MPR at 27.50 per cent.
The Statistician-General of the Federation (SGF)/Chief Executive, National Bureau of Statistics (NBS), Adeyemi Adeniran, while announcing the new inflation figures in Abuja, explained that the rationale for the rebasing of the country’s Gross Domestic Product (GDP) and the CPI was to ensure that economic indicators accurately reflect the current structure of the economy.
He said, “Over time, with innovation, development, globalization, and changes in the production and consumption pattern of goods and services within the borders of a nation, the structure and size of the economy begin to change.
“This change in the consumer pattern equally leads to a change in the general composition of the basket of items which is used to measure the average change in price levels in the economy. “Given all these, it is necessary to move the base year to which the CPI index is measured, to a year much closer to the current period. It is this process that is commonly referred to as rebasing.”
Adeniran said under this process, “NBS is not only bringing the base year closer to the current period, from 2009 to 2024, but we have also introduced some critical methodology changes to improve the computation processes and quality of the estimates.”
He said another important improvement is the exclusion of own-production, imputed rents, and gifted items from the aggregates used to come up with the weights.
He said 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,” he said.
“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.”
The nbs boss said going forward, NBS will be publishing some new special indices which include, the Farm Produce Index, Energy Index, Services Index, Goods Index, and Imported Food Index.
For January 2025, these new special indices produced the following inflation rate: farm produce, 10.50 per cent; Energy, 8.9 per cent; Services; 10.47 per cent; goods, 10.79 per cent, while imported goods inflation rate for January is 11.47 per cent.
He however noted that these rates are not year-on-year rates as the headline rates as these indices are new. He informed that the year-on-year rates will commence from January 2026, while the month-on-month rates will commence in February 2025.
Indeed this new inflation rate is going to generate a lot of controversy among economist. Already some are saying that the new inflation rate has not changed anything as according to them the figures do not tally with reality and the lived experiences of Nigerians.
The Lead Director, Centre for Social Justice (CSJ) Barr. Eze Onyekpere said NBS is struggling hard to make itself irrelevant to the needs of Nigerians and to work at purposes which contravene its enabling law.
“Just like it did in the job and employment reports which no one uses or reloes upon, this exercise is a waste of taxpayers money,” he said, adding, “no reasonable organisation is going to rely on this report which is at variance with the truth.”
For Prof Godwin Oyedokun of Lead City University, Ibadan, rebasing can lead to a more accurate representation of current economic conditions as it updates the basket of goods and services considered in the index.
This adjustment he said might show that certain sectors of the economy are performing better than previously recorded, potentially reflecting improved supply chains or changes in consumer spending habits.
However, according to him, the dramatic drop in inflation might also raise questions about the previous calculations and the accuracy of the earlier measures. “It is essential for policymakers to analyze the underlying factors contributing to this change, including any seasonal effects, changes in global commodity prices, and domestic economic policies,” he said, adding, “while the rebased CPI indicates a notable decrease in inflation, continued monitoring and analysis are essential to understand the broader implications for the Nigerian economy and to ensure that the inflation rate reflects true economic conditions.”