Nigeria’s headline inflation had significantly dropped to 24.48%, sharply lower than last month’s data after a rebasing exercise to reflect changes in consumption patterns. This is a significant drop from the previously reported 34.80% year-on-year inflation rate.
The rebasing exercise, which updates the basket of goods and services used to calculate inflation to reflect current consumption patterns, now includes 960 items compared to the previous 740. The benchmark year has also been updated to 2024. Food inflation, a key driver of overall inflation, also saw a substantial decrease to 26.08% from 39.84% following the rebasing.
While the new figures suggest a positive development in the fight against inflation, some experts have raised concerns about the impact of the rebasing on the perceived integrity of the data.
“We need to have a broader conversation about the rebase effect on top-line inflation and whether a statistical reduction is a good thing,” one policy expert who did not want to be named said.
The new rebased data is sure to lessen the work of the monetary policy committee whose job in the next 48 hours will be to maintain an inflation target of 21%. With the current inflation figure at 26%, there is optimism that the country will attain the targeted figure in no time. However, it does call the data integrity of the NBS into question.
Since December 18, 2024, after the NBS was hacked for nearly a month, a lot of things have radically changed about the agency, raising eyebrows regarding the means of operations.
The delayed release of the inflation data, three days after the usual 15th of the month publication date, has also drawn attention. This is the first time in decades that the figures relied upon by many economic actors and investors will be deferred.
The timing of the rebasing and the subsequent drop in inflation coincides with recent Central Bank of Nigeria (CBN) interventions in the foreign exchange market, which have strengthened the naira. However, it remains to be seen whether these measures, along with potential interest rate hikes by the CBN Governor Cardoso at the Monetary Policy Committee meeting, will translate to lower prices for consumers. Many Nigerians continue to experience rising prices for essential goods and services.
