Inflation surges to 34.80% ahead rebasing

.As MPC buys time for rebasing, moves meeting to February

Consumer prices rose at a faster annual pace in December 2024 to 34.80 percent from 34.60 percent seen in November.

This would be the last inflation figure calculated using the old methodology.

In the new methodology, the proposed base year for inflation computation is 2024. The year was proposed to capture the structural changes that occurred due to the removal of subsidies on foreign exchange and premium motor spirit (PMS), also known as petrol.

Also, the constituents of the inflation basket are expected to expand from 740 to 960.

The updated 2024 classification system will replace the current 1998 version. This change will increase the number of divisions from 12 to 13.

Read also: Nigeria’s sky-high inflation rate seen falling after data revamp says Bloomberg

This was made known at the sensitisation workshop on Gross Domestic Product (GDP) and Consumer Price Index (CPI) rebasing organised by the Nigerian Economic Summit Group and the NBS last week.

Ayo Andrew, head of price statistics at the NBS, revealed that it will release the December consumer price index and another index that puts rebasing into the context this month.

“We would have the December CPI released this month and then the rebased CPI by the end of January,” Andrew said during the panel session.

CPI rebasing is ‘disingenuous’

Analysts argue that the GDP rebasing will yield an exaggerated growth number, and the CPI rebasing will downplay the inflation rate.

“The CPI rebasing framework is disingenuous. A price reference base year put at 2024 and a weight reference period put at 2023 – two peak periods of the country’s first ever shock therapy reforms- will ensure that aggregate price pressures are not adequately accounted for,” Basil Abia, cofounder Veriv Africa, a data insight company, said.

The inflation report is necessary for making economic decisions, including the monetary policy rate

Nigeria’s monthly inflation, a more accurate measure of current inflation, dropped to 2.44 percent from 2.638 percent in November.

Read: Will Nigerians feel projected inflation drop in their pockets?

Food inflation, which constitutes more than 50 percent of headline inflation, dropped to 39.84 in December from 39.93 percent in November.

Meanwhile, on a month-on-month basis, core inflation stood at 2.24 percent in December 2024 from 1.83 percent in November, down by 0.41 percent point.

MPC buys time for inflation rebasing

Meanwhile, the Monetary Policy Committee (MPC) meeting, which is held bi-monthly, has been postponed to February 17 and 18, three months after the last meeting in November, as authorities buy time for the rebased inflation figures.

The new date, which is reflected in the MPC meeting calendar for 2025, marks a breakaway from the traditional bi-monthly meetings.

The market had been led to expect a meeting this month after Olayemi Cardoso, CBN governor, said at the last meeting in November 2024 that the committee would reconvene on January 27 and 28, 2025.

The postponement to February buys the MPC time for the new inflation methodology to kick off in January.