The National Bureau of Statistics (NBS) is set to release its much-anticipated Consumer Price Index (CPI) rebasing report today, highlighting an average inflation rate of 24.48% over the past year.
According to sources and independent surveys, the latest rebasing exercise introduces significant improvements in methodology, expands product categories, and updates the base year to better reflect current economic realities.
These adjustments aim to enhance the accuracy of Nigeria’s inflation measurement.
Despite concerns over rising prices, preliminary reports suggest a slowdown in inflationary pressure, offering some relief to consumers and businesses.
The rebased headline inflation dropped from 34.80 per cent in the pre-rebased period of December 2024 to 24.48 per cent in January 2025 after the rebasing.
Rebasing means updating the weight and price reference periods in the calculation of the CPI or inflation rate.
Globally, rebasing is done by the statistics office every five years.
The NBS is statutorily empowered to undertake such rebasing in Nigeria.
However, the last reference period in Nigeria was 2009, which made the CPI less reflective of changes in consumption patterns and the economy generally.
With the rebasing, the CPI computation has been updated with a new weight reference period of 2023, price reference period or base year of 2024 and wider coverage of 934 product varieties compared to the previous 740 product varieties.
Other major structural changes in the rebasing were the use of a digitised questionnaire other than the old paper questionnaire, the change in classification methodology to the more updated and expansive 2018 version from the 1999 version, the use of a short-term relative index other than the previous long-term relative index and the change of the elementary index from Dutot to Jevon.
According to experts, while both long-term and short-term relative indices give the same results, the short-term relative index allows for products and outlets substitution while Jevon is preferred to Dutot because Jevon passes all four economic criteria of transitivity, reversibility, commensurability and proportionality.
Specifically, under the rebasing, the NBS has not only brought the base year closer to the current period, from 2009 to 2024, but it also introduced some critical methodology changes to improve the computation processes.
Under the CPI, reports showed that important enhancements have been made to the methodology.
The improvements included the transition to the latest version – Classification of Individual Consumption According to Purpose (COICOP) 2018 Version.
This new version has 13 divisions, bringing in household expenditure on insurance and financial services, which now weighs 0.5 per cent relative to the total household expenditure.
Also, another important improvement was the exclusion of own-production, imputed rents, and gifted items from the aggregates used to come up with the weights.
This is important because CPI is a monetary phenomenon, hence the computations should only include monetary expenditure.
Another change was the movement of expenditures on meals away from home to the appropriate divisional class.
These changes were quite significant and appropriately aligned expenditures to their respective classes, enabling price changes to be measured properly.
With all the enhancements to the methodology and the movement of the base year and price reference periods closer to the current period, the price estimates from NBS will be much more reflective of the current inflationary pressure experienced within the economy.
“It also means that in terms of the quality of the process and soundness of the estimates, NBS data will be among the top, and comparable to any other in Africa and indeed across the globe,” a report stated.
Independent surveys and reports also supported a slowdown in inflationary pressure.
Independent research and economic firms that used the old methodology in anticipation of the release of the new computation methodology, found that inflation trended downward slightly in January 2025.
Most analysts, even under the old methodology, had expected a gradual but steady reduction in the inflation rate.
The International Monetary Fund (IMF) projected a decline in inflation to some 23 per cent in 2025, 16 per cent in 2026, 15.4 per cent in 2027, and 14 per cent in both 2028 and 2029.
Analysts expected the rebasing to lead to greater disinflation.
Financial Derivatives Company (FDC), led by Bismarck Rewane, stated that its latest market survey using the old methodology and basket showed that headline inflation declined from 34