With the rebasing of inflation to a base year of 2024, analysts at Commercio Partners have stated that the Consumer Price Index (CPI) is set to be around 15 to 20 per cent, falling within the federal government’s projected 15 per cent for 2025.
This comes as the Central Bank of Nigeria (CBN) has shifted the date for the first Monetary Policy Committee (MPC) meeting of the year to Wednesday, February 18 and Thursday, February 19, 2025, despite delays in releasing the rebased inflation and Gross Domestic Product (GDP) figures by the National Bureau of Statistics (NBS).
The CPI rebasing exercise will shift the base year from 2009 to 2024, reflecting changes in household consumption patterns and economic realities. Additionally, the basket of goods and services tracked will increase from 740 to 960 items, with significant category weight changes.
The head of Investment Research at Comercio Partners, Dr Ifeanyi Ubah, speaking on the 2025 macroeconomic outlook report entitled “Looking Forward to the Future,” said the decline in inflation was expected to trigger a reduction in benchmark interest rates.
“We expect headline inflation to decrease to around 15 per cent in the first half of 2025, indicating a gradual return to economic stability. At first glance, this adjustment is expected to lower headline inflation figures, but a closer analysis reveals a more nuanced picture.
“While the base effect from the rebasing will reduce the CPI for 2025, it will also revise the 2024 figures downward. The resulting direction and magnitude of year-on-year inflation will hinge on the price changes within each commodity basket over the two periods.
“Given that 2024 recorded one of Nigeria’s highest inflation rates, the updated base year is likely to make subsequent price index figures appear relatively lower. With no immediate catalysts for a significant inflation spike in 2025, this statistical adjustment aligns with expectations of declining inflation trends.
“Additionally, the reduced weightings for key inflation drivers, particularly food and energy, reinforce the likelihood of a substantial drop in inflation. This strengthens our case for the forecast of Nigeria’s inflation dropping significantly by mid-2025,” the report said.
Meanwhile, the CBN stated that the 299th MPC meeting, scheduled for February 17 and 18, 2025, will now be held on Wednesday, February 18 and Thursday, February 19, 2025. The apex bank said this is expected to quell speculation about the meeting dates amidst delays by the National Bureau of Statistics (NBS) in releasing the rebased Consumer Price Index (CPI).
With a date now fixed, economic watchers are focused on the CBN’s MPC to ascertain whether current trends will lead to a hold or hike in the monetary policy rate (MPR). The announcement ends speculation about the meeting dates amidst delays by the NBS in releasing the rebased Consumer Price Index (CPI).
