Market News

• Consumer prices rose 24.5% in January from unrevised 34.8%
• The price index was overhauled for the first time in 16 years

By Nduka Orjinmo

Nigeria’s annual inflation rate fell in January after the statistics office revised the data used to calculate household expenditure, clouding the interest-rate outlook.

Consumer prices rose 24.5% in January, Prince Adeyemi, head of the National Bureau of Statistics, said at a news conference in the capital, Abuja, on Tuesday. That compared with an unrevised 34.8% in December. Food inflation slowed to 26.1% from an unrevised 39.8%.

Consumer prices rose 24.5% in January, Prince Adeyemi, head of the National Bureau of Statistics, said at a news conference in the capital, Abuja, on Tuesday. That compared with an unrevised 34.8% in December. Food inflation slowed to 26.1% from an unrevised 39.8%.

The bureau overhauled the consumer price index for the first time in 16 years and changed the reference year to 2024. It also reweighted certain categories and increased the number of items in the inflation basket to 934 from 740.

The changes to the methodology means that the inflation gauge will be “much more reflective” of price pressures in the economy, Adyemi said.

Economists Divided

The revamped data has economists divided on what the central bank’s monetary policy committee may do next on interest rates when it meets Feb. 19-20.

Those like Absa Group Ltd.’s Ridle Markus and Rand Merchant Bank’s Oyinkansola Samuel said ahead of the release that they foresee the MPC leaving borrowing costs at 27.5% after it raised rates by 875 basis points last year.

“We expect that the committee will maintain the status quo, first because of our projection that inflation has now peaked and should taper going forward, but also because we believe the MPC will take a cautious approach, assessing the new CPI data prints post the rebasing exercise,” Samuel said.

Others like Robert Asogwa, a former policymaker at Nigeria’s central bank, are less convinced it will hold.

Inflation Expectations

The MPC will be concerned by its own reading on inflation expectations “which is still very high as buyers and sellers will not take into cognizance whether you have rebased or not,” said Asogwa.

(Corrects interest rate in paragraph six)