Economists and financial experts have called on the Central Bank of Nigeria (CBN) to pause interest rate hikes following the rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS), which saw Nigeria’s headline inflation rate decline to 24.48 per cent year-on-year in January 2025......CONTINUE READING THE ARTICLE FROM THE SOURCE>>>>>
The report highlights a decline in the general price level of goods and services, dropping from 34.80 per cent in December 2024, a figure calculated using the previous methodology to 24.48 per cent in January 2025 following the rebasing of the Consumer Price Index (CPI).
Statistician-General of the Federation, Adeyemi Adeniran, announced this during a press briefing in Abuja on Tuesday, emphasizing that the rebased inflation figures offer a more accurate reflection of consumer spending patterns and the prevailing economic realities in Nigeria.
Nigeria’s first Professor of Capital Market and the founder and pioneer President of the Capital Market Academics of Nigeria hailed the rebasing exercise, describing it as a necessary step to reflect current inflationary pressures more accurately.
In an exclusive interview with THE WHISTLER, he explained that the NBS’s decision to update the reference price period to 2024 enhances the reliability of inflation data, benefiting economic planning and policy-making.
The professor highlighted that the rebased CPI figures will aid the government and monetary authorities in making more informed decisions, while also aligning Nigeria’s inflation metrics with global standards. This, he noted, would boost investor confidence, both foreign and domestic, by providing a clearer picture of the country’s economic landscape.
He further pointed out that the easing inflationary pressures indicated by the January data could prompt the CBN’s Monetary Policy Committee (MPC) to consider halting further interest rate hikes to stimulate economic growth and increase output.
Similarly, Arthur Stevens Asset Management Limited and the former President of the Chartered Institute of Stockbrokers (CIS) endorsed the rebasing exercise, emphasizing its role in capturing economic activity more comprehensively.
The expert noted that while prices remain high, the recalculated economic size has contributed to the lower inflation figures.
He cited the inclusion of previously unrecorded products, particularly in the food inflation category, as a key factor.
The expert argued that accurately measuring economic activity is crucial for macroeconomic indicators, which directly impact citizens’ lives.
He added that a reduced inflation rate could motivate the MPC to lower interest rates, resulting in lower borrowing costs, increased investment, and overall economic growth.
The Centre for the Promotion of Private Enterprise (CPPE) also urged the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to pause further increases in interest rates, citing concerns over the adverse effects on the manufacturing and real sectors.
Chief Executive Officer of CPPE, Dr. Muda Yusuf emphasized that maintaining current interest rates would allow fiscal policy measures to tackle inflation effectively.
Speaking ahead of the MPC meeting, Yusuf stated, “My expectation from the MPC meeting is to maintain a hold; however, my preference is to begin relaxing some of the tightening measures due to the excessively high interest rates.”
He expressed that further hikes in the Monetary Policy Rate (MPR) or the Cash Reserve Ratio (CRR) would be detrimental, adding, “I believe it is time to pause these hikes and allow fiscal policy measures to tackle inflation.”
Yusuf highlighted that supply-side issues such as energy, production, and import costs are significant drivers of inflation, urging fiscal authorities to play a more active role in addressing these challenges. He warned that the current high-interest rates are stifling investment, job creation, and entrepreneurship.
“In the worst-case scenario, there should be a pause in rate hikes. However, my preference is to begin relaxing some of these tightening measures to provide relief to the real economy,” he reiterated.
Yusuf also called for enhanced fiscal policy interventions, particularly in managing energy, import, and transportation costs, which are closely tied to energy expenses.
He expressed optimism about the global energy outlook, attributing potential decreases in energy costs to U.S. policies under President Donald Trump and ongoing peace efforts between Ukraine and Russia.
He noted that while lower energy costs could benefit businesses, they might have negative revenue implications. Yusuf further stressed the need for the Nigerian government to provide incentives to the real economy and ensure prudent fiscal management to avoid overheating the economy.
The rebasing exercise is seen as a significant move towards enhancing the accuracy of Nigeria’s economic data, supporting sound policy formulation, and fostering a more favorable investment climate.
The Director of the African Centre for Shared Development, Professor Olu Ajakaiye, said the rebasing is a statistical process that does not affect market prices but is simply a measurement adjustment.
“They just moved the base from 2019 to 2024. Before one can talk about its effects, we have to see what happens next month. The current cost of living in Nigeria has reflected in the cost of doing business, therefore worsening the prices of final consumer goods,” he said.
He added that the increase in the prices of goods and commodities has been witnessed across all sectors of the economy, with percentage rates reading in the hundreds.
According to him, this is mostly driven by the cost of Petroleum Motor Spirit (PMS), diesel, and electricity, among others.
“Everybody is asking for an increase in price, from the manufacturers to telecoms, banks, and down to the market environment.
The cost of PMS and other products has continued to affect production costs, likewise electricity costs. These are the agents behind the inflationary pressures, not just the numbers. So, the rebasing is not reflecting any change in the fundamental drivers, just that we have changed the numbers—the base of the calculations.
“If there is a significant downward change in PMS prices, which in turn reflects on the naira, then the cost of transport would drop.
“Until we start seeing that change in the fundamental drivers, all this game of numbers would have no effect. However, it is a statistical process and a welcome idea.
“Subsequently, we need to see if the weight of various goods and commodities in the computation of the Consumer Price Index (CPI), based on the new study conducted through the Consumer Expenditure Survey, will give us the weight of various categories of goods in the basket. Until then, what we have is a change of base, not a change in the realities of vulnerable Nigerians,” he said.
When further asked about the investment advantage in response to the decline in inflation, Ajakaiye told THE WHISTLER, “Unless investors eyes are shut, the rebasing process will not attract investment. Because the cost of production has not changed, the Manufacturers Association of Nigeria (MAN) is grumbling, citing the cost of electricity and petroleum products. Until these drivers are addressed, investors will seek a more business-friendly environment.”
According to him, “What drives any investment is the feelings of the consumers in the economy. And this can only be addressed by easing energy costs, which in turn affect all distribution chains.”
He further noted that despite being endowed with electricity, hydro, and gas, Nigeria has yet to leverage its natural resources.
“We have everything needed to make Nigeria a bona fide economy. We have the market, population, resources, and people, but Nigeria is not taking advantage of all these endowments and is instead raising costs without policies to address the effect.
“We have everything and behave as though we have nothing. If these resources are used extensively, we would see development across all sectors, subsequently attracting investment. Until then, this is just a game of numbers.”