Nigeria’s headline inflation rate dropped to 24.48% year-on-year in January 2025, following the rebasing of the Consumer Price Index (CPI), according to data released by the National Bureau of Statistics (NBS).
The report highlights a decline in the general price level of goods and services compared to 34.80% in December 2024, which was calculated using the previous methodology.
The Statistician-General of the Federation, Adeyemi Adeniran, disclosed this on Tuesday during a press briefing in Abuja, noting that the rebased inflation figures provide a more accurate representation of consumer spending patterns and economic realities in the country.
According to the latest NBS report, urban inflation stood at 26.09%, while rural inflation was recorded at 22.15%. The report highlights a decline in the general price level of goods and services compared to 34.80% in December 2024, which was calculated using the previous methodology.
Adeniran explained that the rebased Consumer Price Index (CPI) involved updating the reference year and modifying the basket of goods and services used in inflation measurement.
This adjustment ensures that inflation figures better reflect current economic conditions and consumer spending habits.
Food and Core Inflation
The rebased food inflation index stood at 26.08% year-on-year in January 2025, indicating a decline from the 39.84% recorded in December 2024 under the old methodology.
- The food inflation index measures the price movement of essential food items, which constitute a significant portion of household expenditures in Nigeria.
- Similarly, the core inflation rate, which excludes volatile agricultural produce and energy prices, stood at 22.59% year-on-year in January.
- The decline in core inflation suggests easing inflationary pressures in non-food sectors of the economy.
Implications of CPI Rebasing
The NBS noted that the rebasing of the CPI is a critical step in ensuring that inflation data remains relevant and reflective of economic realities.
The previous base year did not adequately capture the changes in consumer behavior, emerging market trends, and shifts in spending patterns over time.
Economists argue that while the lower inflation figures offer some relief, the cost of living remains high, and the impact of inflation continues to be felt across various sectors.
The effectiveness of government policies, including monetary tightening by the Central Bank of Nigeria (CBN) and fiscal interventions aimed at stabilizing prices, will be crucial in determining future inflation trends.
What you should know
- The drop in inflation could signal improved economic stability, but it does not necessarily translate into lower prices in the immediate term.
- Instead, the slower pace of inflation means that prices are rising at a reduced rate, offering some relief to households and businesses struggling with high costs.
- The business community will be closely watching how the government navigates inflation control measures while ensuring sustained economic growth.
- The CBN’s monetary policies, exchange rate stability, and fiscal strategies will play a key role in shaping inflationary trends in the coming months.
