After Rebasing, Nigeria’s Inflation Drops To 24.48% From 34.80%

There was a huge decrease in Nigeria’s inflation figures for January 2025 released by the National Bureau of Statistics (NBS) on Tuesday as headline inflation rate dropped to 24.48 percent from 34.80 percent under the old inflation template.

This is following the rebasing of the Consumer Price Index (CPI).

The CPI rebasing, according to NBS, reflects updated consumer spending pat­terns, replacing outdated goods and ser­vices with current ones to better gauge inflation. With the new base year of 2024, the January inflation rate reflects more recent price comparisons.

The rebased food inflation stood at 26.08 percent year-on-year in January, down from 39.84 percent in December. Core inflation, excluding volatile agricul­tural and energy prices, dropped to 22.59 percent from 29.28 percent in the previous month. Urban inflation also declined to 26.09 percent, while rural inflation de­creased to 22.15 percent.

The NBS stressed that while infla­tion appears lower, this decline is largely due to the shift in the base year and the updated inflation basket, rather than a reduction in overall price levels.

The rebased CPI is designed to provide more accurate data for government, businesses, and households to make informed de­cisions, with the NBS reaffirming its commitment to producing re­liable statistics in line with global standards.

The NBS said the rebasing – in which the items in the reference ‘basket’ used to calculate infla­tion were reweighted and the comparison period was updated from 2009 to 2024 – was necessary to reflect changes in consumption patterns.

Statistician General of the Federation and Chief Executive officer of NBS, Prince Adeyemi Adeniran, said, “The price es­timate from NBS will be much more reflective of the current in­flationary pressure experienced within the economy.”

“It’s not saying prices have come down in the market to this rate, but the rate of change between 2024 January and 2025 January is what the inflation rate is all about,” Adeniran said.

The Coordinator of the Na­tional Statistical System said the “All-Items Index which is used to measure headline inflation for January 2025 was 110.7, resulting in a headline inflation rate of 24.48% on a year-on-year basis.”

According to him, the increase was mainly driven by food and non-alcoholic beverages, restau­rants and accommodation ser­vices and transport.

He said the food index for Jan­uary 2025 was 110.03, resulting in a food inflation rate of 26.08% year-on-year.

“The core index which is all-items less farm produce and energy for January 2025 was 110.7, which gave rise to a core inflation rate of 22.59% year-on-year”, he said.

In disaggregating by sector, the urban inflation rate was 26.09%, while the rural inflation rate was 22.15%.

He noted that in line with im­provements made to the report­ing of the CPI, going forward, NBS will be publishing some new special indices to inform policymakers.

These special indices 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 as these indices are new, the year-on-year rates will commence from Jan­uary 2026, while the month-on-month rates will commence in February 2025.

He clarified that the rates be­ing reported here are January compared to the base year, which is an average of prices in 2024.

“This rebasing process also allows Statistical Offices to intro­duce methodological enhance­ments to their computation pro­cedures and align with global best practices.

“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.

“Under the CPI, important enhancements have been made to the methodology. Some of the improvements include the transition to the latest version of the classification method, the Classification of Individual Con­sumption According to Purpose (COICOP) 2018 version, from the 1999 version of COICOP.”

According to him, the new version has 13 divisions, bringing in household expenditure on In­surance and Financial Services, which now has a weight of 0.5% relative to the total household ex­penditure.

Another important improve­ment is the exclusion of own-pro­duction, imputed rents, and gifted items from the aggregates used to come up with the weights. 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.”

While reiterating that the rebasing was free from political interference, he said January’s in­flation would still have dropped if the rebasing was not carried out.

Daily Independent learnt that the NBS’s decision to rebase the CPI is aimed at improving the accuracy of inflation tracking. The new methodology reflects changing consumption patterns and incorporates more up-to-date price data.

Before the rebasing, food ac­counted for over 50 percent of the CPI calculation, but with the revised structure, the influence of food prices has been reduced to 40 percent. The updated CPI also includes more product varieties, increasing from 740 to 934 items, and now tracks expenditure on services more comprehensively.