Nigeria’s inflation fee decelerated in January 2025 after the Nationwide Bureau of Statistics (NBS) applied a rebased Client Worth Index (CPI) that altered the weighting of key elements within the inflation basket.
Headline inflation eased to 24.48% in January, down from 34.8% in December 2024, reflecting the affect of the NBS’s new methodology, which lowered meals’s weight within the inflation calculation from 51.8% to 40.1%. This adjustment softened the impact of rising meals costs, at the same time as underlying pressures remained.
Earlier than the rebasing, analysts had projected Nigeria’s inflation to stay elevated in early 2025, with expectations of a gradual decline later within the yr. Nevertheless, the revised CPI construction has launched new variables that will reshape inflation dynamics. Whereas meals costs continued to climb on account of provide chain disruptions and naira depreciation, the lowered weighting muted their affect on the general inflation determine. Meals inflation stood at 24.08% down from 39.84% recorded in December 2024.
The rebasing additionally shifted the contribution of different expenditure classes, probably smoothing out a number of the inflationary spikes seen in earlier months. Nevertheless, structural inflation dangers persist, notably in power and transport prices.
Regardless of the decrease headline inflation, analysts warn that the decline could not totally mirror value pressures on customers, notably for important items. With the rebased CPI now in impact, future inflation readings will supply a clearer image of how Nigeria’s inflationary panorama is evolving.
The Financial Coverage Committee (MPC) is predicted to take a measured method in response to the brand new inflation numbers. Whereas a slowdown in inflation might present some aid, uncertainties round meals inflation and foreign money volatility should still preserve policymakers on guard.