NBS Unveils New Inflation Template, Reduces Food Weight to 40% Amid Economic Hardship
The National Bureau of Statistics (NBS) has unveiled a new Consumer Price Index (CPI) template, reducing the weight of food in the inflation basket from 51.8% to 40%. While the move is intended to reflect changing consumption patterns, critics argue that it is a mere statistical adjustment that does little to address the harsh economic realities faced by Nigerians.
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The rebasing of the CPI, which now uses 2024 as the base year instead of 2009, has led to a significant drop in the reported inflation rate. For January 2025, the headline inflation rate fell sharply from 34.8% in December 2024 to 24.48%, with food inflation dropping from 39.8% to 26.08%. However, these figures have been met with skepticism, as they starkly contrast with the lived experiences of Nigerians grappling with skyrocketing prices, stagnant incomes, and worsening living conditions.
Why the New Template?
The NBS explained that the rebasing was necessary to reflect changes in consumption patterns and economic activities. According to the agency, the new template aligns with global best practices and captures the rising adoption of telecommunication services, increased transportation costs due to urbanization, and reduced spending on luxury items like clothing and alcoholic beverages.
For instance, the weight of communication in the CPI basket has risen from 0.7% to 3.3%, while transportation has increased from 6.5% to 10.7%. Conversely, the weight of clothing/footwear and alcoholic beverages has decreased, reflecting a shift in consumer priorities.
NBS Chief Executive Adeyemi Adeniran emphasized that the rebasing aims to ensure that economic indicators accurately reflect the current structure of the economy. “Over time, with innovation, development, and changes in production and consumption patterns, it is necessary to move the base year to a period much closer to the current time,” he said.
A Statistical Mirage?
Despite the NBS’s explanations, many Nigerians and economic analysts view the new inflation figures as a statistical sleight of hand that fails to address the root causes of inflation. Eze Onyekpere, Lead Director of the Centre for Social Justice (CSJ), criticized the rebasing, stating that it makes the NBS irrelevant to the needs of Nigerians.
“No reasonable organisation will rely on this report, which is at variance with the truth. This exercise is a waste of taxpayers’ money,” Onyekpere said.
The reduction in food weight to 40% has particularly drawn criticism, as food remains the most pressing concern for the majority of Nigerians. While the new template may reduce the weighted impact of food prices on headline inflation, it does nothing to lower the actual cost of food in the markets.
The Harsh Reality on the Ground
The new inflation figures come at a time when Nigerians are facing unprecedented economic hardship. The country is grappling with:
Soaring Food Prices: Despite the reduction in food weight in the CPI basket, the cost of staple foods like rice, beans, and garri has more than doubled in the past year. Many families can barely afford one meal a day.
High Energy Costs: The removal of fuel subsidies and the depreciation of the naira have led to a sharp increase in the cost of petrol, diesel, and electricity. This has further driven up transportation and production costs, exacerbating inflation.
Weak Naira: The naira continues to lose value against the dollar, making imported goods and raw materials more expensive. This has a ripple effect on the prices of locally produced goods.
Unemployment and Underemployment: Millions of Nigerians are out of work or underemployed, reducing household incomes and purchasing power.
Insecurity: Farmers in many parts of the country are unable to access their farms due to banditry and kidnapping, leading to food shortages and higher prices.
High Interest Rates: The Central Bank of Nigeria’s tight monetary policy has made borrowing more expensive for businesses, stifling investment and economic growth.
CPPE’s Cautionary Note
The Centre for the Promotion of Private Enterprise (CPPE) has warned Nigerians to approach the reported decline in inflation with caution. Dr. Muda Yusuf, Director/CEO of CPPE, noted that while the rebasing and base effects may explain the sharp drop in inflation, the reality of high prices remains unchanged.
“Households and firms are still concerned about high energy costs, the strength of the naira, high interest rates, cost of imports, transportation costs, and insecurity,” Yusuf said. He called on the government to recalibrate its strategies to address these underlying cost drivers.
A Call for Action, Not Just Statistics
While the rebasing of the CPI may provide a more accurate reflection of current consumption patterns, it does little to alleviate the economic suffering of Nigerians. The government must move beyond statistical adjustments and implement concrete measures to address the root causes of inflation and economic hardship.
Key steps include:
Boosting agricultural production to reduce food prices.
Stabilizing the naira to lower the cost of imports.
Improving security to enable farmers to return to their fields.
Reducing energy costs to ease the burden on households and businesses.
Creating jobs and increasing incomes to improve purchasing power.
The NBS’s new inflation template may have reduced food weight to 40% on paper, but it has done nothing to reduce the cost of food in reality. Nigerians continue to face severe economic challenges, and the government must take decisive action to address these issues. Until then, the reported decline in inflation will remain a statistical mirage, disconnected from the harsh realities of everyday life.
Reference
NBS Unveils New Inflation Template, Reduces Food Weight to 40% Amid Economic Hardship