Explainer: Nigeria’s CPI Rebasing: Methodology, Significance, and Key Findings

The Consumer Price Index (CPI) is a critical economic measure that tracks changes in household spending on goods and services. The National Bureau of Statistics (NBS) computes and reports CPI monthly to reflect inflation trends in Nigeria.

CPI rebasing is the process of updating the base year used for measuring price changes and adjusting the weighting structure of goods and services in the index. This ensures the CPI remains relevant by reflecting current consumption patterns and economic realities. In February 2025, Nigeria rebased its CPI, shifting the base year from 2009 to 2024, with the weight reference period updated to 2023.

Why is CPI Rebasing Important?

• The rebasing enables the CPI to better reflects current economic reality
• Consumption patterns change due to income levels, urbanization, and technological advancements. Rebasing ensures the CPI accurately represents the modern cost of living.
• Government agencies, businesses, and investors rely on CPI data for monetary policy, wage adjustments, and social planning. An outdated CPI could misrepresent inflation trends, leading to ineffective policies.
• Most National Statistical Offices (NSOs) rebase their CPI every five years. Nigeria’s previous CPI base year of 2009 had become outdated.
• Rebasing introduced digital data collection, improved classification methods, and better price-tracking accuracy.

How Was the Rebasing Done?

The rebased CPI used household expenditure surveys and administrative data to determine new weights for goods and services.

Key data sources included:

• 2023 Nigeria Living Standards Survey (NLSS)
• 2024 Survey of Rare Items
• Administrative records from the Central Bank of Nigeria (CBN) and the National Insurance Commission (NAICOM)

Key Methodological Changes

Key Findings from the Rebasing

Changes in Weighting Structure

Food vs Core Inflation: Why Food Prices Still Dominate the Conversation

The chart above compares food inflation and core inflation (excluding food & energy) from January 2024 to January 2025.

Key Takeaways:

1. Food prices are rising rapidly

   • The Food Inflation Index hit 110.33, meaning food prices increased by 26.08% year-on-year.
   • Food remains the biggest driver of inflation, even though its weight in the CPI has been reduced.
   • Nigerians feel inflation most when buying essentials like rice, beans, cooking oil, and bread.

2. Core inflation is also increasing

   • The Core Inflation Index reached 110.87, showing a 22.59% increase year-on-year.
   • Core inflation covers rent, transport, healthcare, education, and services.
   • While still high, core inflation is slightly lower than food inflation, meaning non-food costs are increasing more gradually.

3. Why food inflation is still high:

   • Exchange rate volatility affects imported food prices.
   • Fuel and transport costs impact food distribution, making food more expensive.
   • Local food production struggles with insecurity, floods, and poor infrastructure, leading to shortages.

What This Means for Nigerians:

• Households are spending more on food than ever before, making it harder to afford other essentials.
• Inflation control efforts must focus on food supply chains—reducing import costs, improving local production, and ensuring stable transport costs.
• If food inflation remains high, even wage increases won’t feel enough, as rising food costs will erode purchasing power.

Headline Inflation Trends (Rebased CPI)

Urban vs. Rural Inflation: What’s Happening?

The chart above tracks how inflation has changed in urban and rural areas from January 2024 to January 2025, after the CPI rebasing.

Key Insights:

1. Urban areas face higher inflation

   • The Urban CPI index jumped to 111.19, reflecting a 26.09% rise in prices compared to January 2024.
   • City dwellers feel inflation more due to higher transport costs, rent, and food prices.

2. Rural areas see slower price growth

   • The Rural CPI index reached 109.47, showing a 22.15% increase year-on-year.
   • Many rural communities rely on local food production, reducing their exposure to inflation from imported goods and transport costs.

3. Why the gap?

   • Urban consumers pay more for fuel, housing, and services (e.g., internet, electricity, healthcare).
   • Rural areas depend more on self-produced food, reducing the impact of rising market food prices.
   • Imported inflation (driven by exchange rate changes) affects urban areas more.

Takeaways for the Average Nigerian:

• City dwellers need to budget more for rent, transport, and services, which are driving up urban inflation.
• Rural residents are not immune to inflation, but they are cushioned by local food production and lower housing costs.
• Government policies on fuel, transport, and imports will have a stronger impact on inflation in urban centers.

What the Rebasing Means for Nigeria

1. More Accurate Inflation Measurement:
   The new methodology and updated weights ensure that inflation tracking better reflects current consumer behavior.

2. Better Economic Policy Formulation:
   Policymakers can use the updated CPI data to adjust interest rates, wage policies, and social interventions effectively.

3. Impact on Investment & Business Decisions:
   Businesses can rely on the more refined inflation data to adjust pricing strategies, production planning, and investment decisions.

4. Regional Economic Insights:
   The state-wise inflation indices provide a clearer picture of price variations across Nigeria.

By adopting modern data collection tools, classification methods, and weighting structures, Nigeria’s rebased CPI is now better aligned with global standards, enabling more precise macroeconomic planning.