The recent Consumer Price Index (CPI) adjustment by the National Bureau of Statistics (NBS) could boost investors’ confidence in the nation’s economy but may not immediately ease the cost of living among Nigerians.
This is the view of Dr. Paul Alaje, the CEO of SPM Professionals, who clarified in an exclusive interview with Nairametrics that the reported decline in inflation from 34.80% to 24.48% is not an actual reduction in inflation but rather a statistical shift due to a change in the reference year from 2009 to 2024.
“It’s not a reduction in inflation. It will be wrong for people to say inflation dropped from 34% to 24%. That would be a misleading narrative. If inflation truly drops, we should see the reflection in prices, but that is not what we have seen,” he stated.
According to Alaje, the National Bureau of Statistics is essentially resetting the economic baseline, which naturally leads to a recalibration of the inflation rate.
“What the Bureau of Statistics has done today is not to say that inflation dropped. The Bureau is saying: ‘we are no longer going to reference 2009 as the base year; we will now start referencing 2024.’ Definitely, you’ll get a different [lower] figure,” he explained.
Despite the statistical adjustment, Nigerians should not expect immediate relief from high food and commodity prices. Alaje noted that the fundamental economic realities remain unchanged.
“If people go to the market, chances are high that the prices of goods and services will still be high. That does not mean that if you go to the market tomorrow, the price of food has improved—that would be a lie. Our reality remains the same.”
This means that, for the average Nigerian, inflation remains a persistent challenge despite the seemingly improved figures.
Investor Confidence Could Improve
While the new CPI figures may not directly impact household expenses, they could positively influence investor sentiment. Lower inflation numbers can make Nigeria appear more stable and attractive to foreign and domestic investors.
“Also, people who want to invest in our country, perhaps when they see a reduced inflation rate, will have confidence, and we need this,” Alaje added.
Other experts speak
Dr. Muda Yusuf, the CEO of the Centre for the Promotion of Private Enterprise (CPPE), provided clarity on the implications of the rebasing exercise, cautioning against premature celebrations.
In a statement sent to Nairametrics on Tuesday, Yusuf said, “It is important to clarify that a drastic reduction in inflation figures is not tantamount to a reduction in the price level. Inflation reduction means a reduction in the rate of increase in the general price level, not a price reduction. The drastic deceleration in inflation should, therefore, be cautiously celebrated.”
Similarly, Dr. Chinyere Almona, the Director-General of the Lagos Chamber of Commerce and Industry (LCCI), emphasized that rebased inflation figures do not necessarily address the economic hardship faced by Nigerians.
“A rebased inflation rate does not resolve the rising cost of living. For most Nigerians, essential costs like food and transportation remain high, meaning living conditions will not improve unless there is a real reduction in the cost of necessities. While the rebased inflation rate provides policymakers with a clearer view of economic trends, it does not resolve the rising cost of living. The government must implement targeted interventions to address inflationary pressures and improve economic stability.”
Concerns Over Economic Hardship
Offering a broader perspective, Dr. Nasir Aminu, a Senior Lecturer in Economics and Finance and a Senior Fellow of Advanced Higher Education at Cardiff Metropolitan University, highlighted that the rebasing exercise does not change Nigeria’s economic realities.
Speaking to Nairametrics, he said “The question is: How is it in real terms? It’s just about optics. It’s not going to change the inflation rate. It’s not going to change the profound hardship in the country that is ongoing.”
His remarks demonstrate concerns that while statistical adjustments may provide a more refined analysis of inflation trends, they do not address the fundamental issues driving high costs in the economy.
More insights
The National Bureau of Statistics (NBS) adjusted the methodology for calculating inflation, leading to a sharp drop from 34.80% recorded in December 2024 under the previous system.
While the revised figures provide a more refined statistical perspective, economic analysts stress that they do not reflect improved affordability of essential goods and services. Nigerians continue to struggle with high costs of food, transportation, healthcare, and housing, making daily survival increasingly difficult for many households.
According to the latest report by the NBS, urban inflation was 26.09%, while rural inflation stood at 22.15%, reflecting changes in the method used to measure price movements in the economy.
