Nigeria’s Inflation Has Dropped To 24.48%, But How?

Nigeria’s headline inflation which stood at 34.80%; the highest in three decades has sharply dropped to 24.48% year on year in January 2025 after a recent Consumer Price Index (CPI) rebasing. 

 The National Bureau of Statistics (NBS) stated that the rebasing of inflation calculations—where the weights of items in the reference basket were adjusted and the comparison period was updated from 2009 to 2024—was necessary to reflect evolving consumption patterns.

During a briefing in Abuja, Adeniran announced that the Consumer Price Index (CPI), which tracks the rate of price changes for goods and commodities, had decreased to 24.48% year-on-year in January. He further explained that urban inflation stood at 26.09%, while rural inflation was recorded at 22.15%.

“The price estimate from NBS will be much more reflective of the current inflationary pressure experienced within the economy,” Statistician-General Prince Adeyemi Adeniran told a press conference in Abuja. He clarified that the latest data should not be seen as a sharp slowdown in inflation. Before the rebasing, the statistics bureau had reported December’s year-on-year inflation at 34.80%.

 “It’s not saying prices have come down in the market to this rate, but the rate of change between 2024 January and 2025 January is what the inflation rate is all about,” Adeniran said. He stated that the overall prices of goods and services in the country had declined compared to the 34.80% recorded in December under the old methodology. He added that the rebasing was done to align with international standards.

What’s CPI Rebasing?

CPI rebasing involves updating the reference year used to measure price levels in the country. This process adjusts the basket of goods and services used to track inflation, ensuring it reflects current consumer spending patterns and the state of the economy.

For the period under review, the rebased food inflation rate stood at 26.08% year-on-year in January, marking a decline from the 39.84% recorded in the previous month. Similarly, the rebased core index, which excludes the prices of volatile agricultural produce and energy, was 22.59% year-on-year in January.

According to the National Bureau of Statistics (NBS), the updated CPI more accurately represents current inflationary pressures and consumption patterns in the country, and while the Consumer Price Index is meant to be rebased every five years, Nigeria has not conducted a rebasing since 2009 due to resource constraints.

 What’s The Impact Of The New Inflation Rate?

Adeniran stated that the latest CPI rebasing was supported by data and technical assistance from the World Bank, the International Monetary Fund, and the Central Bank of Nigeria.

However, Razia Khan, chief economist for Africa and the Middle East at Standard Chartered, noted that financial markets had not anticipated such a significant impact on the headline inflation rate. She added that the lower inflation figure for January could pave the way for a potential interest rate cut at the central bank’s monetary policy meeting this week.

Last year, the central bank raised interest rates by 875 basis points as inflation surged, driven by President Bola Tinubu’s policies to remove subsidies and devalue the naira. His administration aims for these reforms to strengthen public finances and stimulate economic growth.

Earlier this month, Central Bank of Nigeria (CBN) Governor Yemi Cardoso reaffirmed the bank’s commitment to curbing inflation and stabilizing the economy.

 “Our focus must remain on price stability, the planned transition to an inflation-targeting framework, and strategies to restore purchasing power and ease economic hardship,” Cardoso said during a Monetary Policy Forum 2025 in Abuja.