Nigeria’s inflation rate has declined to 24.48% year-on-year in January 2025, according to the latest data released by the National Bureau of Statistics (NBS). The drop follows the rebasing of the Consumer Price Index (CPI), which aims to provide a more accurate reflection of consumer spending patterns and economic conditions in the country.
During a press briefing in Abuja on Tuesday, the Statistician-General of the Federation, Adeyemi Adeniran, highlighted that the updated inflation figures reflect a significant shift from the previous methodology. Under the old system, the inflation rate stood at 34.80% in December 2024. The rebased CPI has now recorded urban inflation at 26.09% and rural inflation at 22.15% for January 2025.
Rebasing the CPI for Accuracy
The rebasing of the CPI involved updating the reference year and revising the basket of goods and services used to measure inflation. This adjustment ensures that the index better captures current economic realities, including changes in consumer behavior and emerging market trends. Adeniran emphasized that the new methodology provides a more precise representation of price movements and their impact on households and businesses.
Decline in Food and Core Inflation
The rebased food inflation index for January 2025 stood at 26.08% year-on-year, a notable decrease from the 39.84% recorded in December 2024. Food inflation, which tracks the price changes of essential food items, remains a critical concern for Nigerian households, as food expenditures constitute a significant portion of their budgets.
Similarly, core inflation, which excludes volatile agricultural produce and energy prices, dropped to 22.59% in January. This decline indicates easing inflationary pressures in non-food sectors, offering a glimmer of hope for economic stability.
Implications of the CPI Rebasing
The NBS described the CPI rebasing as a crucial step in ensuring that inflation data remains relevant and reflective of Nigeria’s evolving economic landscape. The previous base year had become outdated, failing to account for shifts in consumer spending and market dynamics. Economists have welcomed the updated figures but caution that the cost of living remains high, and inflationary pressures continue to affect households and businesses.
The effectiveness of government policies, including the Central Bank of Nigeria’s (CBN) monetary tightening measures and fiscal interventions, will be pivotal in shaping future inflation trends. While the lower inflation rate suggests some progress, sustained efforts are needed to stabilize prices and support economic growth.
Impact on Consumers and Businesses
The decline in inflation offers a measure of relief to consumers and businesses, signaling a potential easing of economic pressures. However, it does not mean an immediate reduction in prices. Instead, it indicates that prices are rising at a slower rate, which could help households and businesses better manage their expenses.
The business community is closely monitoring the government’s approach to inflation control, particularly in areas such as exchange rate stability, monetary policy, and fiscal strategies. These factors will play a critical role in determining whether the downward trend in inflation can be sustained in the coming months.
Looking Ahead
While the drop in inflation is a positive development, challenges remain. The high cost of living continues to weigh heavily on Nigerians, and the government must maintain a balanced approach to ensure long-term economic stability. The CPI rebasing marks a significant step toward more accurate economic data, but its true impact will depend on how effectively policymakers address the underlying causes of inflation.
In the meantime, the January 2025 inflation figures offer a cautiously optimistic outlook for Nigeria’s economy, highlighting the importance of continued reforms and targeted interventions to support growth and stability.
