Nigeria’s inflation drops to 24.48% in January after rebasing

… food inflation now 26.08 %

…GDP figures not concluded yet-Statistician general

Nigeria’s inflation rate dropped to 24.48% in January after rebasing exercise, the country’s statistical authorities have revealed. The news figures showed food inflation rate now 26.08 percent while GDP figures are yet to be out.

The National Bureau of Statistics (NBS) calculated January’s inflation figures using a revised methodology, which will includes a new base year and updated weights for the consumer price index (CPI).

Read also: NBS to release rebased inflation figures as MPC convenes

Nigeria’s last inflation report before this one showed a surge in inflation rate to 34.80% in December 2024, up from 34.60% in November 2024. This represents a 0.20% increase month-on-month and a 5.87% increase year-on-year compared to December 2023. The inflation rate was driven by the festive period demand for goods and services in December.

Food inflation had dropped slightly to 39.84% in December from 39.93% in November. On the other hand, core inflation, which excludes food and energy prices, rose to 2.24% in December from 1.83% in November.

In the new methodology, the proposed base year for inflation computation is 2024. The year was proposed to capture the structural changes driven by the removal of subsidies on FX and PMS.

Also, the constituents of the inflation basket was expanded from 740 to 960 and on the divisional level, items contributing to the inflation basket was increased to 13 from 12 with the addition of financial and insurance services.

Analysts at FBNQuest projected Nigeria’s headline inflation post-rebasing CPI exercise to show a moderation in the headline reading in the month of January.

“ Our expectation is premised on the high base effect from last year and the reduced impact of inflationary components on Nigeria’s inflation basket due to the re-adjustment of the CPI weighting,” they said.

President Bola Tinubu last year announced a 15 percent inflation target for Nigeria’s 2025 budget.

Data on similar countries shows rebasing has proven to effect a little change in inflation rate before and after rebasing. For instance, the year-on-year inflation rate in South Africa decreased by 0.2 percent after rebasing, while Kenya’s inflation decreased by 1.5 percent. In Ghana however, it rose by 6.9 percent.

However data suggests that not all countries that rebased their CPI saw inflation decline. Uganda, for instance, experienced an increase from 2.3 percent to 2.71 percent after shifting its CPI base year from 2009 to 2021. Kenya and Nigeria have had similar experiences in past rebasing exercises.

The new figure might come as a relief as 85.5 percent of large businesses in the country perceive inflation levels to be high, which demonstrates the persistent economic challenges faced by enterprises in Nigeria.

This is according to the Central Bank of Nigeria (CBN)’s Inflation Expectations Survey (IES) for January 2025.

The survey further detailed that 78.2 percent of medium-sized business, 77.6 percent of small business, 80.9 percent of micro businesses also share similar sentiments regarding inflationary pressures.