In January 2025, the National Bureau of Statistics (NBS) reported a significant decrease in the Consumer Price Index (CPI), which measures the rate of change in the prices of goods and services. Following the rebasing of the CPI, inflation dropped to 24.48% year-on-year, down from 34.80% in December 2024, reflecting an improvement in the general price level across the country.
The rebasing process involves updating the reference year for calculating inflation, allowing for a more accurate reflection of current consumer spending patterns. This methodology replaces outdated items with new ones that better represent what people are purchasing today. The revised CPI now uses 2024 as the base year, as opposed to the previous 2009 base year.
Key CPI Trends After Rebasing
- Food Inflation: The rebased food inflation stood at 26.08% year-on-year in January 2025, a significant decrease from 39.84% in December 2024.
- Core Inflation: The core inflation, which excludes volatile agricultural and energy prices, was recorded at 22.59%, down from 29.28% in December 2024.
- Urban and Rural Inflation: Urban inflation fell to 26.09%, down from 37.29% in the previous month. Rural inflation also dropped to 22.15%, compared to 32.47% in December 2024.
Despite the decline in inflation, the NBS clarified that this does not necessarily mean the general price level is decreasing. The key factor behind this change is the base year shift, bringing the reference period closer to current price levels. As a result, the CPI now reflects more accurate consumption patterns and inflationary pressures, allowing for better decision-making by the government, businesses, and households.
The Importance of CPI Rebasing for Accurate Economic Indicators
The rebasing of the CPI is a critical step in aligning the country’s economic indicators with its current economic structure. Adeyemi Adeniran, the Statistician-General of the Federation, emphasized that the rebasing aims to provide more accurate data reflecting emerging sectors and consumption trends, enabling more effective policy decisions.
Adeniran further clarified that the purpose of the rebasing exercise was not to meet any specific expectations but to align with global standards of economic measurement. The updated CPI is a vital tool for the Nigerian government, policymakers, civil society organizations (CSOs), and other stakeholders to track the impact of policies and programs on the economy and citizens.