Nigeria’s Inflation Rate Drops in January After CPI Rebasing—But Is It Real Relief?

Nigeria’s inflation rate slowed in January 2025 following the National Bureau of Statistics (NBS) rebasing of the Consumer Price Index (CPI), which altered the weight of key components in the inflation calculation.

According to the NBS, headline inflation dropped to 24.48% in January from 34.8% in December 2024, largely due to the reduced weighting of food in the index—from 51.8% to 40.1%. While food prices continued to rise amid supply chain disruptions and naira depreciation, their reduced influence in the CPI muted their impact on the overall inflation figure. As a result, food inflation fell from 39.84% in December to 24.08% in January under the new methodology.

Does the Inflation Drop Reflect Reality?

While the rebased CPI provides a more updated reflection of Nigeria’s economic structure, some analysts caution that it may not fully capture real price pressures on consumers, particularly for essential goods. Energy and transportation costs remain structural risks, and price stability is still uncertain.

Before the rebasing, analysts had expected inflation to remain high in early 2025 before gradually slowing. Now, the revised CPI introduces new dynamics that could influence inflation trends throughout the year.

Policy Implications

The Monetary Policy Committee (MPC) will likely take a cautious approach when reviewing the new inflation data. While the drop could signal relief, underlying risks—especially in food inflation and currency volatility—may keep policymakers alert. Future inflation readings will offer better clarity on whether Nigeria is truly experiencing a slowdown or if this decline is more statistical than substantial.