Nigeria plans to reweight its inflation index to 2009 from 2004 by the end of the year to reflect the impact of non-food items on prices more accurately, the National Bureau of Statistics (NBS) told Reuters on Monday.
Nigeria rebased its GDP on Sunday for the first time in 24 years, valuing it at $509.9 billion and enabling it to surpass South Africa as the continent’s biggest economy.
Speaking to the Reuters Africa Investment Summit, the Statistician of the Federation, Mr. Yemi Kale, said Nigeria would also reweight the inflation index to take into account the growing middle class with rising incomes.
Bringing the GDP base year to 2010, from 1990, helped it capture changes in the economy including the rise of mobile phones and Internet. The inflation reweighting will be less dramatic, but previous moves have reduced inflation estimates.
Over the past year Nigeria has seen single-digit inflation for the first time in five years, to some extent because of tamer food prices but also tight monetary policy.
Kale said food currently accounts for 60 per cent of the inflation basket and is very volatile, skewing data, compared with non-food data which is more stable.
“We are updating our records to … reflect the true macroeconomic picture of Nigeria,” Kale told the summit.
He said his office also sought to measure the impact of a halving of gasoline subsidies by the government in 2009.
The size of Nigeria’s middle class has also expanded, though it is still tiny, and with it consumption patterns have changed in favor of capital goods like cars while less is being spent comparatively on food.
“We are witnessing an increase in non-food consumption expenditure but the magnitude is what will determine the impact (on inflation),” he said.
Nigeria is Africa’s top oil producer and is heavily dependent on imports paid for by oil receipts.