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The Centre for the Promotion of Private Enterprise (CPPE) said the sharp deceleration in the headline inflation rate from 34.8 per cent in December 2024 to 24.48 per cent in January did not come as a surprise given the review of the computation base year from 2009 to 2024.
Earlier on Tuesday, the National Bureau of Statistics (NBS) put Nigeria’s annual inflation rate at 24.48 per cent in January from 34.80 per cent in December 2024, after rebasing.
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The NBS said the rebased Consumer Price Index (CPI) reflects an updated price reference period (base year) of 2024 and a weight reference period of 2023.
In a statement signed by Muda Yusuf, director of CPPE, the think tank said there is additionally a strong base effect on the inflation figures given the high inflation regime in 2024, which had a considerable effect on the year-on-year inflation outcomes.
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“The sharp deceleration of the headline inflation rate from 34.8 per cent in December 2024, to 24.48 per cent in January 2025, the drop in food inflation from 39.8 per cent to 26.08 per cent and the decline in core inflation from 29.28 per cent to 22.59 per cent did not come as a surprise given the review of the computation base year from 2009 to 2024,” Mr Yusuf said.
Besides, he said transaction demand in December 2024 was typically much more intense because of the festivities while the spending momentum in January was predictably much slower because of lower disposable incomes following intense spending in the previous month.
These, the think tank said, are some of the explanatory factors for the sharp deceleration in the inflation numbers in January 2025.
However, he said it is important to clarify that a drastic reduction in inflation figures is not tantamount to a reduction in price level.
“Inflation reduction simply means a reduction in the rate of increase in the general price level, not a reduction in price.
“The drastic deceleration in inflation should therefore be cautiously celebrated. The reality of high prices has not changed and remains a major factor in the cost of doing business, cost of living and poverty equation in the country,” he said.
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Mr Yusuf noted that households and firms are still concerned about high energy costs, the strength of the naira, high interest rate, cost of imports, transportation costs and insecurity.
“It is hoped that the government will recalibrate its strategies to address these major cost drivers. What businesses and households desire at this time is a reduction in the general price level from the incredibly high levels in 2024 to a substantial moderation in 2025, which is defined in technical parlance as disinflation.
“The good news, however, is that we are beginning to see indications of such reductions in Premium Motor Spirit (PMS), diesel, some food items and pharmaceutical products. It is hoped that this trajectory will be sustained in the course of the year,” he said.
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