Nigeria's Inflation Rate Declines After Data Revision
Consumer prices in Nigeria rose 24.5% in January 2023, marking a decrease from the previously reported 34.8% in December 2022. This revision follows an overhaul of the consumer price index (CPI) by the National Bureau of Statistics (NBS).
The NBS updated the CPI for the first time in 16 years, changing the reference year to 2024, reweighting certain categories, and increasing items in the inflation basket from 740 to 934. Prince Adeyemi, head of the NBS, stated that these changes make the CPI "much more reflective" of current economic price pressures.
Economists Divided on Interest Rate Outlook
The revamped data has sparked debate among economists regarding the possible actions of the Central Bank of Nigeria (CBN) at its upcoming monetary policy committee meeting on February 19-20. Some analysts believe the MPC will maintain the current interest rate of 27.5% due to the anticipated decline in inflation. However, others argue that the MPC may consider increasing rates due to still-elevated inflation expectations.
Food Inflation Slows
Food inflation, which constitutes a significant portion of household expenses in Nigeria, moderated to 26.1% in January 2023 from 39.8% in December 2022. The overall core price growth rate, which excludes food and energy prices, stood at 22.6%.
The revised inflation data adds complexity to the CBN's interest rate decision. The MPC will need to carefully assess the new CPI information and consider both inflation expectations and the broader economic impact of any potential policy changes.