Nigeria’s inflation rate saw a notable decline in January 2025, following the National Bureau of Statistics (NBS) adjustment to the Consumer Price Index (CPI) methodology. This rebasing altered the weight of key components in the inflation basket, significantly impacting the overall inflation calculation.
According to the latest NBS data, headline inflation eased to 24.48% in January, down from 34.8% in December 2024. This decline is primarily attributed to the CPI adjustment, which reduced the weighting of food prices from 51.8% to 40.1%, tempering the impact of rising food costs despite continued supply chain disruptions and currency depreciation.
Before the rebasing, many analysts had projected that Nigeria’s inflation rate would remain high in early 2025, with a gradual decline expected later in the year. However, the newly revised CPI structure has introduced a different trajectory, muting the impact of soaring food prices on overall inflation figures.
Food inflation, which stood at 39.84% in December 2024, dropped significantly to 24.08% in January 2025, largely due to the adjusted weighting in the inflation index. While this revision provides a different statistical representation, the actual prices of goods and services continue to climb, reflecting ongoing economic pressures.
The rebasing also redistributed the influence of other expenditure categories, smoothing out some of the extreme price fluctuations recorded in previous months. However, structural inflation risks remain, particularly in sectors like energy, transportation, and imported goods, where costs are still heavily influenced by exchange rate volatility and global price trends.
Despite the reported slowdown in inflation, economic analysts caution that this decline may not fully capture the real cost-of-living pressures faced by Nigerian households. Essential goods, including food and fuel, remain expensive, and many consumers may not feel the immediate benefits of the rebased CPI.
With the new inflation metrics in place, future reports will provide a clearer picture of Nigeria’s inflationary trends and whether the decline in headline inflation aligns with actual market realities.
The Monetary Policy Committee (MPC) is expected to adopt a cautious stance in response to the latest figures. While lower inflation could signal potential relief, persistent food price increases and currency fluctuations remain key concerns for policymakers. The Central Bank of Nigeria (CBN) may maintain a measured monetary policy approach, balancing inflation control with economic growth objectives.
