Market News

By Joseph Chibueze, Abuja

Nigeria’s inflation rate slowed to 23.18 per cent in February, 1.3 percentage points down from 24.48 per cent recorded in January following the consumer price index (CPI) basket rebasing.

The National Bureau of Statistics (NBS), which announced this yesterday, said the February inflation rate was driven by food and non-alcoholic beverages, which rose by 9.2 per cent.

The report said food inflation climbed down from 25.18 per cent in January to 23. 51 per cent. The drop, according to the NBS, was due to the drop in the prices of some food items, including beans, maize and cassava.

The report also showed that urban inflation was 25.15 per cent. Earlier this year, the NBS changed the CPI base year from 2009 to 2024, an action it believed has translated to a more accurate inflation figure. It also changed the composition of the index.

The rebasing also saw the introduction of some critical methodology changes to improve the computation processes and quality of the estimates. Other changes introduced by the NBS are the exclusion of own-production, imputed rents and gifted items from the aggregates used to come up with the weights.

Government had earlier projected an inflation rate of 15 per cent for 2025, a target many economists said would be an uphill task given the rate at which prices of goods and services are rising in the country.

Nigeria has witnessed a consistent rise in headline and food inflation over the last four years but it reached a crescendo in June 2023 with the removal of fuel subsidy and subsequent floating of the naira.
Prices skyrocketed in response to the increase in the cost of fuel and the cost of imported goods.

Since then, the inflation rate has maintained a steady rise leading to a high cost of living and sparking off hunger protests across the country last year. The Central Bank of Nigeria has tried without much success to force down the high inflation by hiking the interest rate – a measure it believed would reduce the money supply.

Experts have criticised the hike in interest rates, which they said has contributed to inflation. The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the CBN needs to address supply-side issues such as foreign exchange shortages, insecurity and weak purchasing power, rather than relying on interest rate hikes.

Even the International Monetary Fund (IMF), at a time, cautioned the CBN that its high interest rate policy could end up fueling inflation, rather than curbing it, a position that was recently echoed by the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele.