The National Bureau of Statistics’ (NBS) decision to rebase the Consumer Price Index (CPI)- used to track household expenditure- may result in the lowering of Nigeria’s high inflation rate, according to a Bloomberg report.
The report noted that the changes will come into effect at the end of this month, after the publication of December CPI data on Wednesday.
“The revamped CPI basket will feature 960 items, up from the current 740, and there will also be changes to the weight of categories that make up the index.
Most notably food, which consumes the bulk of the household budget, has been reduced to 40.1 per cent from 51.8 per cent, while the housing, energy and electricity category will shrink to 8.4 per cent from 16.7 per cent.
“Nigerian inflation had been expected to ease this year regardless of the reweighting amid tight monetary policy. But the changes are expected to cool prices even further, though economists are divided on the extent to which inflation will ease,” the report said.
It quoted President of the Nigerian Economics Society and a former member of the central bank’s Monetary Policy Committee as saying that, adjusting the weights comes with the, “implication that the inflation figure is going to reduce.”
He added: “What has been driving inflation in Nigeria has been the food-price inflation, so if food now has a lower weight I won’t be surprised if the figure that will be announced by the NBS will be close to what the budget has.”
The report stated that Nigeria’s 2025 budget, currently being considered by lawmakers, factored in an annual inflation rate of 15% and President Bola Tinubu reaffirmed that target in a New Year’s broadcast, adding that the goal was dismissed as unrealistic by critics, and the CPI-rebasing exercise has fanned suspicions that it will tactically serve to help meet that objective.
