Nigeria’s annual inflation rate fell sharply to 24.48% in January, according to the National Bureau of Statistics, following the first rebasing of the Consumer Price Index in more than a decade.
The rebasing, which updates the basket of goods and services used to calculate inflation, revealed a significantly lower inflation rate than previously estimated. While the rebasing does not necessarily reflect a sudden decline in price pressures, it provides a more accurate picture of the current inflationary landscape.
The lower inflation figure could open the door for the Central Bank of Nigeria to consider easing its monetary policy stance. The bank has aggressively raised interest rates in recent months to combat inflation, but the latest data may provide some room for maneuver. However, the bank will need to carefully weigh the risks of further easing against the potential for renewed inflationary pressures.
The rebasing of the CPI highlights the challenges of accurately measuring inflation in a dynamic and evolving economy. Factors such as changing consumption patterns, technological advancements, and the impact of global events can significantly impact price trends.
The Nigerian government will need to continue to monitor inflation trends closely and adjust its economic policies accordingly to ensure sustainable and inclusive economic growth.