Lagos: The current inflationary trends and economic indicators further buttress the imperative of rebasing Nigeria’s Consumer Price Index (CPI). CPI is a statistical measure that tracks the weighted average of prices of a basket of goods and services consumed by households. It is a widely used indicator of inflation, which measures the rate of change in prices of goods and services over time in an economy. The year-on-year percentage change in the CPI is referred to as the headline inflation rate, which is computed and reported monthly by the National Bureau of Statistics (NBS) in Nigeria.
According to News Agency of Nigeria, different indices make up the CPI framework, which includes the Urban and Rural National Index, Headline Index, Food Index, Core Index, All Items Less Farm Produce Index, Farm Produce Index, Goods Index, Services Index, and Energy Index. Experts say the CPI is supposed to be rebased every five years due to changes in consumption patterns of households and firms within the economy. Rebasing also involves bringing the base year closer to the current period to which current prices are being compared to arrive at the CPI. This is to ensure that the CPI reflects the current inflationary pressure of an economy.
Regrettably, this routine exercise done every five years by National Statistical Offices across the world was last done over 10 years ago in Nigeria. The NBS has been using 2009 as the base year to arrive at the CPI for Nigeria. Nonetheless, the NBS recently conducted the long overdue rebasing. The rebased CPI results were presented to the public on Feb. 18 by the Statistician-General (SG) of the Federation and Chief Executive Officer of the NBS, Prince Adeyemi Adeniran. Adeniran said the rebasing was designed to ensure that Nigeria’s economic indicators accurately reflected the current structure of the economy, incorporating new and emerging sectors, updating consumption baskets, and refining data collection methods.
The statistician-general gave a background of the rebased CPI. ‘As we all know, the economy of any society or country is dynamic. Over time, with innovation, development, globalisation 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 that the rebasing process also allowed statistical offices to introduce methodological enhancements to their computation procedures that align with global best practices. Some of the improvements by the NBS to the rebased CPI include the transition to the latest version of the classification method. The Classification of Individual Consumption According to Purpose (COICOP) 2018 version was introduced, moving away from the 1999 version of COICOP. The new version now consists of 13 divisions, an increase from the previous 12 divisions used before the rebasing. This update introduces a category for household expenditure on ‘Insurance and Financial Services,’ which accounts for 0.5 per cent of the total household expenditure.
The updated CPI now includes 934 product varieties, an increase from 740 varieties before the rebasing. Another important improvement is the exclusion of own-production, imputed rents, and gifted items from the aggregates used to come up with the weights. Adeniran said CPI was 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 which is now under ‘Restaurants.’
The bureau also introduced special inflation indices in the rebased CPI report, which include the Farm Produce Index, Energy Index, Services Index, Goods Index, and Imported Food Index. In summary, the weight reference period is now 2023 and the price reference period (Base Year) is 2024, with the updated CPI covering 934 product varieties classified into 13 divisions under the COICOP 2018 framework. On the methodology used for the rebasing, Adeniran said data was collected through structured questionnaires, interviews, and secondary sources like the Central Bank of Nigeria (CBN) and the National Insurance Commission.
The statistician-general said to ensure data quality, fieldwork was conducted using Computer-Assisted Personal Interviewing devices, with close supervision and real-time data transmission to the NBS server. ‘The NBS ensured the process was rigorous, comprehensive, and inclusive, engaging stakeholders through at least nine different stakeholder engagements in Abuja and Lagos. These sessions provided valuable inputs, contributions, and suggestions, while also allowing the NBS to clarify misconceptions and address grey areas in the rebasing process.’
The NBS announced the rebased CPI results, which showed the All-Items Index, which is used to measure headline inflation for January 2025, at 110.7, resulting in a headline inflation rate of 24.48 per cent on a year-on-year basis. What this means, according to economic analysts, is that the general prices of goods and services in Nigeria increased by 24.48 per cent compared to the January 2024 headline index of 88.9 per cent, which resulted in an inflation rate of 29.90 per cent. The NBS said the increase was mainly driven by Food and Non-alcoholic Beverages, Restaurants and Accommodation Services, and Transport.
Adeniran clarified that the rebased CPI results did not indicate a reduction in the prices of goods and services in the market but rather measure the rate at which those prices were decreasing. He said that the Federal Government’s policies aimed at reducing the inflation rate were still in effect, as the government remains committed to ensuring food availability for the population and enhancing citizens’ purchasing power. Before the release of the rebased CPI, there was a consensus by analysts that the overall inflation rate would decrease below the December 2024 rate of 34.8 per cent, which would affect monetary policy decisions.
This was reflected in the decision by the CBN during its first Monetary Policy Committee (MPC) meeting for 2025 to maintain the Monetary Policy Rate (MPR) at 27.59 per cent. The CBN Governor, Olayemi Cardoso, cited the new rebased CPI figures as one of the reasons the committee arrived at the decision to retain the MPR, stating that the new base year for the CPI and the reconstituted consumption basket represent the current economic realities. Cardoso noted that food inflation remained a concern; however, as the government works to enhance food security in producing communities, along with other measures to increase food supply, food prices were expected to continue moderating.
Some economists have praised the rebasing exercise; however, they continue to urge the Federal Government to tackle inflation, particularly regarding food prices. Prof. Uche Uwaleke, Professor of Finance and Capital Market at the Nasarawa State University, said the new inflation figures reflected the current inflationary pressure because the base year was brought closer to 2024. Uwaleke, however, emphasised that the key to addressing inflation was for the government to tackle food and transportation costs because the pressure from those sectors persists, as evidenced by their significant weight in the COICOP 2018 framework of the rebased CPI.
‘If the government can reduce the cost of transportation significantly, especially the pump price of fuel and fix infrastructure, that will go a long way to bring inflation down,’ he said. Dr Paul Alaje, Chief Economist at SPM Professionals, also said that the rebasing of the CPI was a positive step, especially considering that the Nigerian economy was entering a new era. ‘We may never be able to reverse inflation trends if we continue with the old narrative but that does not mean the prices of goods in the market have come down. Perhaps investors will have confidence when they see the new inflation figures and we need this as a county,’ he said.
The NBS says it is upbeat that the rebased CPI has produced estimates that not only reflect the prevailing inflationary pressure in the economy but also the current consumption pattern of households and consumers in Nigeria. It says the latest outcomes will help ensure accurate price tracking across different sectors and regions and inform effective policy formulation for the development of the Nigerian economy.