Nigeria's inflation rate has significantly decreased from 34.8 percent in December 2024 to 24.48 percent in January 2025 following the rebasing of the Consumer Price Index (CPI), according to the National Bureau of Statistics (NBS).
The NBS, in a statement released Tuesday, explained that the rebased CPI reflects an updated price reference period with 2024 as the base year and a weight reference period of 2023. The statistician-general, Adeyemi Adeniran, said the "all-items index which is used to measure headline inflation for January 2025 was 110.7," resulting in the new headline inflation figure.
The rebasing exercise, announced in October 2024, also revealed substantial drops in other inflation measures: food inflation decreased from 39.84 percent to 26.08 percent, core inflation fell from 29.28 percent to 22.59 percent, urban inflation declined to 26.09 percent from 37.29 percent, and rural inflation dropped to 22.15 percent from 32.47 percent.
However, economic experts caution that the dramatic decline in inflation figures does not reflect an actual improvement in economic conditions for everyday Nigerians. The Centre for the Promotion of Private Enterprise (CPPE) emphasized that the sharp deceleration was primarily a statistical effect resulting from the rebased calculations and seasonal spending patterns.
"The drastic deceleration in inflation should therefore be cautiously celebrated. The reality of high prices has not changed and remains a major factor in the cost of doing business, cost of living and poverty equation in the country," said Muda Yusuf, director of CPPE, in a statement.
Yusuf clarified a critical point that many Nigerians may misunderstand: "It is important to clarify that a drastic reduction in inflation figures is not tantamount to a reduction in price level. Inflation reduction simply means a reduction in the rate of increase in the general price level, not a reduction in price."
The fundamentals of the Nigerian economy remain essentially unchanged despite the new inflation figures. Households and businesses continue to struggle with the same economic challenges they faced before the rebasing, including high energy costs, currency weakness, elevated interest rates, import expenses, transportation costs, and security concerns.
The CPPE noted that December's higher inflation rate was partly due to increased festive spending, while January typically sees slower economic activity as disposable incomes decrease following holiday expenditures. These seasonal factors, combined with the technical recalculation, explain much of the statistical decrease rather than any fundamental economic improvement.
While the government may point to the lower inflation numbers as a positive development, the lived economic experience of Nigerians remains characterized by high prices and financial strain. What citizens truly need, according to the CPPE, is actual disinflation – a genuine reduction in the general price level from the extraordinarily high levels experienced throughout 2024.
The NBS has announced it will begin publishing additional special indices to better inform policymakers, including Farm Produce Index, Energy Index, Services Index, Goods Index, and Imported Food Index, with year-on-year rates for these new measures commencing in January 2026.
