The National Bureau of Statistics (NBS) recently rebased the Nigeria's Consumer Price Index (CPI). This has generated discussions about the relationship between statistical adjustments and the lived realities of Nigerians. While the exercise is a necessary technical update to ensure inflation figures accurately reflect current consumption patterns, it raises critical questions about whether these recalibrated numbers truly capture the economic pressures faced by citizens. 

Do the inflation figures truly reflect the economic hardships experienced by Nigerians, or are they merely statistical constructs? How should policymakers balance the need for accurate economic data with the urgency of addressing real-world inflationary pressures? Can statistical adjustments, such as CPI rebasing, influence public perception of economic conditions, even if actual prices remain high? This article addressed these questions and more. But first, what is CPI, and why rebasing it?

The Consumer Price Index (CPI) is a statistical tool used to measure changes in the average price level of goods and services consumed by households over time. It serves as the primary indicator for calculating inflation. Rebasing the CPI involves updating its base year to reflect more recent consumer behaviour and economic conditions.  This means shifting from a 2009 base year to 2024, a move long overdue given that international best practices recommend rebasing every five years.

The National Bureau of Statistics (NBS) explained that the updated CPI now includes 960 products, up from 740 in the previous basket, and adjusts the weightings assigned to different categories of goods and services. For instance, food’s weight in the CPI basket has been reduced from 51.8% to 40.1%, while sectors like housing, transportation, and healthcare now carry greater significance. This has impacted the headline inflation rate. 

The rebased CPI has led to a drop in reported inflation rates. For January 2025, Nigeria’s headline inflation was recorded at 24.48%, down from 34.8% in December 2024 under the old methodology. Food inflation stood at 26.08%, while core inflation (which excludes volatile items like food and energy) was reported at 22.59%.

While these figures suggest an improvement, experts caution against interpreting them as evidence of easing inflationary pressures. For example, the lower contribution of food prices to overall inflation creates the illusion of moderation. However, food prices remain high, and their reduced weighting does not alleviate their impact on household budgets.

Also, it highlights non-food Inflation drivers. The rebasing has brought attention to other inflationary pressures, such as housing, transportation, and healthcare costs. Urban inflation (26.09%) now exceeds rural inflation (22.15%), reflecting higher living costs in cities.

It reignited the debate between statistical adjustment and reality. Rebasing is a methodological update that does not directly influence actual price levels. Nigerians continue to grapple with high living costs despite changes in how inflation is measured. This call for asking a critical question. Is the rebasing necessary?

Rebasing is essential for ensuring that inflation figures remain relevant and reflective of current economic realities. The inclusion of newer products and services in the CPI basket ensures that inflation calculations align with contemporary consumer behaviour. This will ensure that policymakers design targeted interventions with accurate data to address inflationary pressures while aligning with international standards.

Given Nigeria's economic landscape—marked by currency devaluation, subsidy removal, and technological advancements—the outdated 2009 base year no longer reflected current realities. Despite its technical merits, there is a disconnect between numbers and reality. CPI rebasing has not addressed the underlying drivers of Nigeria’s inflation crisis.

Food prices in Nigeria remain one of the highest globally at 26.08%, driven by supply chain disruptions, insecurity in agricultural regions, and forex challenges affecting imports. The naira’s volatility against major currencies has increased production costs for import-dependent industries, further fueling inflation.

Issues such as inadequate transportation infrastructure, rising energy costs, and housing shortages continue to exert upward pressure on prices.  This has eroded disposable incomes, leaving many Nigerians unable to afford basic necessities despite statistical adjustments suggesting lower headline rates. These several drivers call for robust policy interventions.

1. Food Security Interventions: With food still accounting for a significant portion of household spending, policies aimed at boosting agricultural productivity, improving logistics, and stabilising forex markets are critical.

2. Addressing Non-Food Inflation Drivers: Housing affordability programmes, investments in public transportation, and energy cost stabilisation must become central to Nigeria’s anti-inflation strategy.

3. Monetary Policy Alignment: The Central Bank of Nigeria (CBN) must ensure that interest rate decisions reflect real economic conditions rather than relying solely on adjusted CPI figures.

4. Public Communication: Transparent communication about what CPI rebasing entails—and what it does not—can help manage public expectations and prevent misconceptions about its impact on living standards.

Rebasing CPI is a necessary step toward improving the accuracy of inflation measurement and aligning it with global best practices. However, it is not a remedy for our nation’s persistent economic challenges. While the new methodology highlights broader inflationary pressures beyond food prices, it does little to alleviate the high cost of living faced by citizens.

For rebased figures to translate into meaningful change, they must be accompanied by policy measures addressing structural bottlenecks in agriculture, housing, transportation, and energy sectors. Policymakers must also recognise that statistical improvements do not equate to economic relief for citizens struggling with shrinking purchasing power.

While numbers are essential for understanding economic trends, they must be grounded in policies that improve real-world outcomes if they are to truly review—and reshape—reality.