CPI Rebasing: Analysts reluctant to forecast January inflation

• Analysts are reluctant to forecast January inflation
• This is due to the delay in the release of the rebased Consumer Price Index report by the National Bureau of Statistics
• Analysts had projected a gradual moderation of inflation in 2025

Due to the delay in the release of the rebased Consumer Price Index (CPI) report by the National Bureau of Statistics (NBS), analysts are cautious and reluctant to forecast the January 2025 inflation figures.

Analysts note that without a clear figure from the revised CPI, it will be difficult and nearly impossible to make accurate predictions about inflation.

The reluctance is also because the inflation figures may lower due to the rebased CPI as the weighting of food, which accounts for the majority of household spending and contributes more than half of the CPI basket, has been slashed to 40.1 per cent from 51.8 per cent.

Recall that the NBS, in October 2024, announced plans to rebase the CPI and Gross Domestic Product (GDP) data to ensure the economy is streamlined according to changing economic realities and make for structural changes.

The NBS had chosen 2019 as the new base year but changed it to 2024. It said the rebasing adds new items to the composition of the inflation basket to reflect the consumption pattern of citizens.

The rebased inflation report for December 2024 was supposed to be released at the end of January 2025, but the NBS failed to do so.

Analysts projected inflation to ease by year-end

In their 2025 economic outlook, analysts projected that Nigeria’s inflation will remain elevated up to mid-year before experiencing some ease by year-end.

The analysts projected the inflation rate to swing between 24 and 30 per cent by the end of 2024. This is even as the Federal Government said it will reduce the inflation rate to 15 per cent in 2025.

The NESG-Stanbic IBTC Business Confidence Monitor (BCM) report noted that headline inflation will remain elevated during the first nine months of the year but will significantly decline in the fourth quarter.

The report projected inflation to decline to 27.1 per cent by December 2025 from an average of 30.5 per cent year-on-year, driven by the stabilisation of petrol prices, exchange rate stability, better fiscal management, and increased agricultural output.

Similarly, Bismarck Rewane, Chief Executive Officer (CEO) of Financial Derivatives Company (FDC), faulted the Federal Government’s 15 per cent aspiration, saying it is ambitious.

Rewane said, “The 15 per cent inflation target is very bullish and aspirational, and everybody is free to have aspiration. The moderation in inflation is not going to be as low as we expected. The reality is that we think inflation will reduce to between 25 per cent and 27 per cent in 2025.”

Also, Ifeoluwa Dixon, Head of Fixed Income Solutions at FBNQUEST Asset Management expects a moderation in the interest rate in the mid-third quarter (Q3) of the year.

Dixon said, “We see inflation and interest rate moderating at the later part of 2025, around mid-Q3.”

Inflation surpassed a 28-year high in 2024

In December 2024, Nigeria’s inflation rate rose to 34.80 per cent in December 2024 from 34.60 per cent in November, marking the fourth time the inflation rate surpassed a 28-year record in 2024.

The increase was driven by such inflationary pressures as high costs of food and transportation, heightened demand for goods and services, especially during the festive period, and rising costs of housing and utility, among others.

Though inflation was higher in some states than others, inflationary pressures were felt across the country.

Achieving 15% inflation target in 2025 requires effective authorities’ collaboration – CBN

Meanwhile, TheRadar earlier reported that the Central Bank of Nigeria (CBN) said achieving the Federal Government’s 15 per cent inflation target as contained in the 2025 budget will require effective collaboration between the monetary and fiscal authorities, as well as the private sector.

The Deputy Governor of the Economic Policy Directorate of the CBN, Muhammad Abdullahi, stated this on Tuesday, January 21, during the 11th National Economic Outlook: Implications for Businesses in 2025, organised by the Chartered Institute of Bankers of Nigeria (CIBN) Centre for Financial Studies in collaboration with B. Adedipe Associates Ltd in Lagos.