NBS gives reasons for rebased Jan inflation of 24.48%

From Isaac Anumihe, Abuja

Statistician General of the Federation (SG), Prince Adeyemi Adeniran, today, explained the reason for the newly-rebased Consumer Price Index (CPI) of 24.48 per cent with food index contributing 110.03 per cent.

Speaking to newsmen in Abuja, the SG said that the figure is the result of a new methodology with over 934 items in the basket and has no reference to the old methodology with 740 items.

According to him, while the old methodology did not capture all the items in the basket, the new methodology which is internationally-recognised, is a composition of all the changes in the economy.

“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. 

“This rebasing process also allows the 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” he said, adding that while the new methodology includes 13 divisions, the old one had 12 divisions.

As for the food Index for January 2025, the SG gave it as 110.03, resulting in a food Inflation rate of 26.08 per cent 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 per cent year-on-year.

Disaggregating by sector, he said, the urban inflation rate was 26.09 per cent, while the rural inflation rate was 22.15 per cent.

“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. The rates being reported here areJanuary compared to the base year, which is an average of prices in 2024” Adeniran further explained.

“For the special indices in January compared to the base year,

farm produce is 10.50 per cent; energy, 8.9 per cent; services, 10.41 per cent; goods, 10.79 per cent; imported food, 11.47 per cent.

“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. The new version has 13 divisions, bringing in household expenditure on insurance and financial services, which now has a weight of 0.5 per cent 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” NBS, said.