In May 2025, Nigeria’s inflation rate was announced at 22.97 percent, down dramatically from the previously reported 33.69 percent the month before. The cause? Not a sweeping policy miracle or sudden structural transformation, but rather a rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS).
For some observers, this statistical recalibration is welcome—if overdue. For others, it’s political sleight of hand: an arithmetic triumph masking an economic struggle. But in the fray of debate, one thing becomes clear—inflation in Nigeria remains stubbornly high, regardless of the measuring stick.
The anatomy of a rebase
CPI rebasing is a legitimate statistical exercise. Economies evolve. Consumption baskets change. Measuring tools must keep pace. The NBS’s decision to shift the base year to 2024—after a delay of over a decade—is, in principle, sound. The problem is timing and trust.
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By moving the price base to a more recent year (2024), which reflects already elevated post-COVID and post-subsidy removal prices, the index appears “cooler” without necessarily reflecting lower cost-of-living pressures. This recalibration effectively compresses inflation readings—not by easing prices, but by changing the reference point. In effect, we are not comparing apples to apples.
This is not merely technical. Inflation measurement is both an economic and political tool. Shifting the baseline in a pre-election year, especially after months of monetary tightening and social unease, inevitably raises suspicions of narrative control rather than economic relief.
Are prices actually falling?
No. Rebasing does not imply prices are falling. It means that the rate at which prices are rising is measured differently. Food inflation remains persistently high, and household surveys still report cost-of-living crises, especially for lower-income groups. The application of Engel’s Law—which states that poorer households spend a larger proportion of income on food—reinforces this disconnect. While the headline number has dropped, the lived experience of Nigerians has not.
In fact, price moderation in a few key energy and transportation segments—attributed in some analysis to recent CBN reforms—has had limited trickle-down effect. Aggregate demand remains weak, and real wages continue to lag. Thus, the euphoria over headline inflation easing appears premature, if not misplaced.
“In fact, price moderation in a few key energy and transportation segments—attributed in some analysis to recent CBN reforms—has had limited trickle-down effect.”
The global context: Are we really doing better?
Some have argued that Nigeria should be praised for its relative improvement compared to countries like Argentina (43.5%), Iran (43.3%), Turkey (35.4%), and Burundi (39.0%). This comparative inflation lens, however, is flawed.
Nigeria’s inclusion among these economies—most of which are battling political instability, sanctions, or currency crises—reinforces our economic vulnerability rather than our policy prowess. Moreover, critics rightly point out that Nigeria has one of the highest interest rates in Africa—ranking third on the continent and sixth globally. Is this disinflation achieved by pain or prudence?
Unlike Argentina, which has embraced painful fiscal austerity, or Turkey, which executed a sharp U-turn to monetary orthodoxy, Nigeria is attempting to achieve price stability through blunt tightening—with less clarity on structural reforms or productivity gains. We are paying a high price for a modest slowdown.
Monetary Policy can’t do it alone
Nigeria’s inflation has never been purely monetary. Structural deficits in food supply, energy distribution, logistics, and infrastructure continue to fuel cost-push inflation. Monetary policy alone cannot solve a supply-side inflation problem. The overreliance on interest rate hikes, without a parallel strategy to increase domestic production or lower import costs, leaves the Central Bank caught between inflation control and growth strangulation. Meanwhile, borrowings to fund past consumption still weigh heavily on fiscal space. To truly tame inflation, Nigeria must widen its toolkit: invest in rural agriculture, fix energy bottlenecks, enhance forex supply (through real exports, not portfolio flows), and drive public sector efficiency. Disinflation without growth is not a victory. It is a delay.
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The CPI and the Credibility gap
One of the most troubling elements of the rebasing exercise is the erosion of statistical credibility. When a major economic indicator is adjusted in a way that conveniently aligns with a political agenda—or appears to—it sows distrust. Economists must hold the line, regardless of their political affiliations. Objective data analysis is the foundation of sound policymaking.
The NBS owes the country a more transparent communication of the rebasing methodology. Why was 2024 chosen as the new base year, despite it being one of the most inflation-distorted in recent memory? How were the new weights derived? How much divergence now exists between the old and new baskets? These are not academic questions—they are issues of economic accountability.
Conclusion: A cautionary decline
Nigeria’s inflation may be statistically “cooling,” but its roots remain hot. Structural imbalances, low productivity, high debt, and fiscal fragility persist. Rebasing is not reform. It is not a substitute for results. Policymakers must resist the urge to declare premature victory based on data that obscures rather than clarifies. Nigerians live in markets, not spreadsheets. Any sustainable victory over inflation will be judged by food affordability, transport cost, rent stability, and rising incomes—not a recalibrated index. Until then, we must remember that a drop in the number is not the same as a drop in the burden.
Dr. Oluyemi Adeosun, Chief Economist, BusinessDay Media
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