Nigeria’s inflation rates slow in January after CPI rebasing (19459000)
Nigerian inflation rate decelerated after the January 2025. National Bureau of Statistics (NBS) implemented a rebased Consumer Price Index that changed the weighting of the key components in the basket of inflation.
The headline inflation rate fell to 24.48 percent in January, from 34.88 percent in December 2024. This is due to the new methodology of the NBS, which reduced the weight of food in the inflation calculation to 40.1% from 51.8%. This adjustment softened the impact of rising food prices even though underlying pressures continued.
Analysts had predicted that Nigeria’s inflation would remain high in early 2025 with a gradual decrease later in the year. The revised CPI structure introduces new variables that could change the dynamics of inflation. The reduced weighting of the CPI structure has masked the impact of the naira depreciation and supply chain disruptions on food prices. Food inflation was 24.08%, down from 39.84% in December 2024.
Rebasing also shifted other expenditure categories’ contributions, potentially smoothing some of the inflationary surges seen in previous month. However, structural inflation remains a concern, especially in the energy and transportation costs.
Analysts warn that despite the lower headline inflation rate, the decline may still not fully reflect the price pressures faced by consumers, especially for essential goods. The rebased CPI will now be used to determine future inflation readings. This will give a better picture of the inflationary landscape in Nigeria.
It is expected that the Monetary Policy Committee will take a measured response to these new inflation numbers. A slowdown in inflation may provide some relief but uncertainty about food inflation and currency fluctuations could still keep policymakers on their guard.
