NBS to Introduce Revised CPI for Nigeria – Implications for the Economy

The National Bureau of Statistics (NBS) on Monday announced the upcoming release of a rebased Consumer Price Index (CPI), a crucial move to capture the reality of current price volatility and evolving economic trends in Nigeria.

The rebased CPI, scheduled for unveiling at the end of January 2025, updates the price reference period to 2024, replacing the previous base year of 2009. This overhaul, according to the agency, reflects significant shifts in household consumption patterns and aligns Nigeria’s CPI methodology with global standards.

At its core, the CPI tracks the prices of goods and services over time, serving as a key measure of inflation. However, as household spending habits evolve, an outdated CPI basket risks misrepresenting actual economic conditions.

The rebasing effort follows the 2023 Nigeria Living Standards Survey, which highlighted changing consumption priorities. For instance, there has been a sharp increase in household spending on telecommunications, a sector that was underrepresented in the old basket.

“The updated CPI will offer a clearer and more relevant picture of economic realities,” said Prince Semiu Adeyemi, Statistician-General of the NBS via a press statement. “This initiative ensures that the CPI reflects current price movements and provides better insights into Nigeria’s economy.”

The updated CPI is expected to yield several benefits:

1. Better Policy Formulation: By providing a more accurate measure of inflation, the rebased CPI will enable policymakers to design more effective monetary and fiscal policies.
2. Improved Economic Comparisons: The use of international standards in the rebasing process allows for meaningful comparisons with other economies, offering insights into Nigeria’s competitiveness.
3. Enhanced Business Planning: Businesses will gain a clearer understanding of price trends, helping them make informed decisions on pricing and investment.

Under the old base year of 2009, the CPI often failed to capture the realities of contemporary spending habits. For example, telecommunications spending now accounts for a significant share of household budgets, reflecting Nigeria’s digital transformation. Incorporating such categories will likely show a more dynamic picture of inflation, especially in urban areas.

Additionally, an updated CPI could better illuminate sectoral price pressures, from food to transportation, offering granular data for targeted interventions.

Economically, this could provide clarity in managing Nigeria’s inflation, which hit 26.72% in October 2024, according to preliminary NBS figures. The rebased CPI will also guide decisions on interest rates, as the Central Bank of Nigeria battles rising costs.

The rebasing exercise reinforces NBS’s commitment to improving data accuracy and transparency. The bureau emphasized that the process follows international best practices, ensuring comparability with global CPI metrics.

“Rebasing the CPI is not just a technical exercise,” said Sunday Ichedi, NBS Director of Communication. “It’s a fundamental step in making Nigeria’s economic data reflective of today’s realities.”

For policymakers, businesses, and households, the rebased CPI represents a tool for understanding Nigeria’s rapidly changing economy. From reflecting modern consumption patterns to providing actionable data for economic planning, the updated CPI signals progress in capturing the pulse of the nation’s financial landscape.