INTRODUCTION
In January 2025, Nigeria’s inflation rate experienced a significant shift, dropping to 24.48% year-on-year. This change follows the rebasing of the Consumer Price Index (CPI), a move aimed at providing a more accurate representation of consumer spending patterns and economic realities in the country.
The rebasing of the CPI involved updating the reference year and modifying the basket of goods and services used in inflation measurement. This adjustment ensures that inflation figures better reflect current economic conditions as the previous base year did not adequately capture the changes in consumer behaviour, emerging market trends, and shifts in spending patterns over time.
COICOP – Classification of Individual Consumption According to Purpose. It is a system used to classify and group goods and services consumed by households for the purpose of calculating the Consumer Price Index (CPI) and measuring inflation
HEADLINE INFLATION
Nigeria’s headline inflation rate dropped to 24.48% in January 2025, a significant decline from the 34.80% recorded in December 2024 under the old methodology. This decline is attributed to the rebasing exercise, which provided a more accurate picture of the inflationary pressures in the economy.
URBAN AND RURAL INFLATION
The report highlights that urban inflation stood at 26.09%, while rural inflation was recorded at 22.15%. This disparity indicates that inflationary pressures are more pronounced in urban areas compared to rural regions.
FOOD AND CORE INFLATION
The rebased food inflation index stood at 26.08% year-on-year in January 2025, down from 39.84% in December 2024. The food inflation index measures the price movement of essential food items, which constitute a significant portion of household expenditures in Nigeria. Similarly, the core inflation rate, which excludes volatile agricultural produce and energy prices, stood at 22.59% year-on-year in January. The decline in core inflation suggests easing inflationary pressures in non-food sectors of the economy.
Overall, while the drop in inflation is a positive development, it is essential to continue implementing effective policies and reforms to sustain this trend and improve the overall economic well-being of Nigerians.
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Sources: National Bureau of Statistics (NBS), Alpha10 Research