New CPI: Changes ahead for prices and investments

In 2025, the country is implementing a major change to how inflation is measured, offering a clearer, more accurate picture of how prices are changing and how they impact everyday life.

“Sectors like real estate, utilities, and hospitality—which are now more heavily represented—are likely to see improved valuations as consumer spending shifts toward these areas.”

This change, known as rebasing the Consumer Price Index (CPI), is more than just a technical update—it’s about understanding the economy as it really is and how that will affect everything from what we pay for goods to government planning and investment strategies.

What is CPI rebasing, and why does it matter?

CPI rebasing is like updating the lens through which we view inflation. The CPI tracks price changes using a “shopping basket” of goods and services, but as spending habits evolve, the basket needs to reflect these changes.

Starting in 2025, the CPI will include 960 items, up from the previous 740. This broader range reflects the changing patterns in what Nigerians buy today, offering a more accurate snapshot of consumption.

The new CPI takes into account factors like urbanisation, rising energy costs, and shifting consumer behaviour. For example, Nigerians now spend more on essentials like housing and utilities while spending less on food and beverages.

Ayo Andrew Anthony, Head of Price Statistics at the National Bureau of Statistics (NBS), explains, “This rebasing isn’t just about numbers—it’s about capturing the reality of today’s Nigeria. People now spend differently, and we need inflation figures to reflect that.”

How the new CPI may affect financial markets

The rebased CPI is expected to impact Nigeria’s financial markets, particularly government bonds, equities, and real estate investments, much like the previous rebase in 2014.

When the CPI was last updated in 2014, inflation-linked bond yields rose due to adjusted inflation expectations. For 2025, government bonds and treasury bills may show higher yields, reflecting the likely rise in inflation. Investors may demand higher returns to offset these risks, pushing borrowing costs up for the government.

Cordros Research predicts that Treasury bill and bond yields will moderate to around 18.5 percent and 18 percent by the end of 2025, assuming inflation stabilises. However, continued pressure on the naira and high energy costs may keep yields elevated, complicating the government’s ability to secure affordable loans.

The stock market will also see changes as the rebased CPI alters sectoral weightings. Sectors like real estate, utilities, and hospitality—which are now more heavily represented—are likely to see improved valuations as consumer spending shifts toward these areas.

Following the 2014 rebase, real estate stocks benefited from increased spending on housing and utilities. The 2025 rebase is expected to have a similar effect, driving interest in these sectors.

On the other hand, companies in the fast-moving consumer goods (FMCG) sector, especially those reliant on food sales, may face slower growth as food becomes less prominent in the CPI.

Cordros Research forecasts a 23 percent return for the NGX All-Share Index in 2025, fuelled by renewed investor confidence and higher foreign portfolio inflows. This signals positive growth for sectors aligned with Nigeria’s changing consumption patterns.

Real estate, in particular, is set for significant gains as urbanisation accelerates, increasing demand for affordable housing. With government capital expenditure on infrastructure expected to rise to ₦4.41 trillion in 2025, both residential and commercial real estate development will likely see growth.

Tosin Fatukasi, CEO of Lomel Homes, a Lagos-based real estate developer, notes, “The demand for housing is huge, especially in urban areas. The new CPI will reflect that, and we expect more investments in this sector.”

Read also: Rebased CPI to capture price volatility, aid policy making – NBS

Opportunities and challenges for Nigerians

While the rebased CPI offers a clearer understanding of inflation’s effects, it doesn’t directly ease the financial strain on households. Rising costs for housing, electricity, and other essentials remain major concerns.

However, the better data will help the government design more targeted policies to address these issues, such as improving energy infrastructure or providing support for vulnerable groups.

For investors, the rebased CPI presents an opportunity to rethink strategies. Assets like real estate investment trusts (REITs) and utility stocks, which are likely to benefit from the changing consumption patterns, will attract more attention as Nigerians look for ways to protect their savings.

Investors who focused on real estate and utility stocks after the 2014 rebase saw strong returns as these sectors grew in response to rising demand. Nigerians can expect similar benefits from long-term investments in these areas as the economy adjusts.

Daniel Williams, an investment advisor, suggests, “This is an opportunity for Nigerians to think long-term. Investing in sectors like utilities and real estate can provide protection against rising prices over time.”

A new economic roadmap for 2025 and beyond

The rebased CPI is more than just an update of statistics—it offers a new framework for managing Nigeria’s economy. By providing a clearer view of inflation, it equips policymakers with better tools for decision-making and interest rate adjustments.

Cordros Research expects inflation to moderate through 2025, with the Central Bank of Nigeria likely to maintain stable monetary policies, possibly cutting rates slightly.

For businesses and investors, the rebased CPI presents an opportunity to align strategies with Nigeria’s changing economic realities. Ultimately, the rebased CPI is a prompt to rethink economic approaches, whether in government policies, financial market investments, or household budgeting.

It’s not just about the numbers; it’s about how they shape Nigeria’s future.

Oluwatobi Ojabello, senior economic analyst at BusinessDay, holds a BSc and an MSc in Economics as well as a PhD (in view) in Economics (Covenant, Ota).