NBS unveils new inflation template, reduces food weight to 40%
19 February 2025 |
1:59 am
The National Bureau of Statistics (NBS), yesterday, released the long-awaited rebased Consumer Price Index (CPI), reducing the weight of food composite by over 22 per cent.
• CPPE indifferent over inflation rate decline, warns Nigerians
The National Bureau of Statistics (NBS), yesterday, released the long-awaited rebased Consumer Price Index (CPI), reducing the weight of food composite by over 22 per cent.
However, the Centre for the Promotion of Private Enterprise (CPPE) has warned Nigerians that the drastic deceleration in inflation should be cautiously celebrated, as the reality of high prices has not changed and remains a major factor in the cost of doing business, cost of living and poverty equation in the country.
NBS reduced the disturbing index from 51.8 per cent to 40 per cent, a decision that would reduce the weighted impact of volatile food prices on headline inflation going forward.
The retooled indices suggest remarkable changes in consumption patterns. While the template suggests a significant drop in the share of food in the consumption basket, communication has increased significantly, from 0.7 per cent to 3.3 per cent, which aligns with the rising adoption rate of telephony services in recent years.
Nigerians may have also cut luxury consumption on average as the weight of clothing/footwear and alcoholic beverages dropped, from 7.7 to five per cent and 1.1 to 0.4 per cent respectively.
House furnishing and house equipment also fell to three per cent from its old five per cent. Transport moved up on the ladder, from 6.5 per cent to 10.7 per cent, justifying the spike in commuting to match the increase in economic activities and urbanisation.
The NBS said that for January 2025, the new special indices show that farm produce stands at 10.50 per cent, the energy index at 8.9 per cent, the services index is 10.47 per cent, goods at 10.79 per cent, while imported goods inflation rate for January 2025 was 11.47 per cent.
The Chief Executive, NBS, Adeyemi Adeniran, explained that the rates were not yet year-on-year rates as the headline rates as the indices were new. He informed that the year-on-year rates would commence from January 2026, while the month-on-month rates would commence this February.
Indeed, this new inflation rate is going to generate a lot of controversy among economists. Already some are saying it has not changed anything since figures do not tally with reality and the lived experiences of Nigerians.
The Lead Director, Centre for Social Justice (CSJ), Eze Onyekpere, said NBS was struggling hard to make itself irrelevant to the needs of Nigerians and to work at purposes which contravene its enabling law.
“Just like it did in the job and employment reports, which no one uses or relies upon, this exercise is a waste of taxpayers’ money,” he said. “No reasonable organisation will rely on this report, which is at variance with the truth.”
While announcing the new inflation figures, yesterday, in Abuja, Adeniran explained that the rationale for the rebasing of the country’s Gross Domestic Product (GDP) and the CPI was to ensure that economic indicators accurately reflect the current structure of the economy.
He said: “Over time, with innovation, development, globalisation and changes in the production and consumption pattern of goods and services within the borders of a nation, the structure and size of the economy begin to change.
“This change in the consumer pattern equally leads to a change in the general composition of the basket of items, which is used to measure the average change in price levels in the economy. Given all these, it is necessary to move the base year to which the CPI is measured, to a year much closer to the current period. It is this process that is commonly referred to as rebasing.”
THE Director/CEO of CPPE, Dr Muda Yusuf, who was reacting to the latest inflation report released yesterday, affirmed that households and firms were still concerned about high energy costs, strength of the naira, high interest rate, cost of imports, transportation costs and insecurity.
He expressed optimism that the government would recalibrate its strategies to address the major cost drivers. Yusuf said: “The sharp deceleration of the headline inflation rate from 34.8 per cent in December 2024 to 24.48 per cent in January 2025, the drop in food inflation from 39.8 per cent to 26.08 per cent and the decline in core inflation from 29.28 per cent to 22.59 per cent did not come as a surprise, given the review of the computation base year from 2009 to 2024.
“There is additionally a strong base effect on the inflation figures given the high inflation regime in 2024, which had a considerable effect on the year-on-year inflation outcomes. Besides, transaction demand in December 2024 was typically much more intense because of the festivities, while the spending momentum in January was predictably much slower because of lower disposable incomes following intense spending in the previous month. These are some explanatory factors for the sharp deceleration in the inflation numbers in January 2025.”
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