MARCEL MBAMALUAs the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) convenes today, the recent rebasing of the Consumer Price Index (CPI) has raised questions about the accuracy of Nigeria’s inflation metrics.
The newly adjusted Headline CPI for January 2025 stands at 24.48% year-over-year, marking a 10.3% decline from the previous month’s figures. However, this recalibration has also sparked concerns about the potential for inaccurate inflation projections and the impact on monetary policy decisions.
Join our WhatsApp ChannelCritics argue that the rebasing of the CPI may not accurately reflect the true state of inflation in Nigeria. The technical acceleration of inflation by 10.68% in January 2025 compared to the new base period, December 2024, raises questions about the reliability of the new inflation metrics. Moreover, the 2.66% rise from the 21.82% initially recorded in January 2024 narrows the inflationary gap, but may not necessarily indicate a significant decline in inflationary pressures.
The MPC’s decision to potentially adopt a dovish stance, holding rates steady or even cutting rates, may be premature. The committee’s interpretation of the inflation drop as a fundamental shift in price stability rather than a mere technical recalibration may be overly optimistic. The upcoming MPC meeting will be closely watched, as it could mark a critical inflection point in Nigeria’s monetary policy, shaping the course of inflation management and economic growth in the months ahead.
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In the bond market, investors are reassessing inflation expectations and adjusting risk models. The decline in inflation could compress near-term risk premiums, potentially encouraging a shift toward long positions if investors anticipate future rate cuts. However, the accuracy of inflation projections remains a concern, and investors should exercise caution when making investment decisions based on the recalibrated CPI.
Ultimately, the CBN’s recalibration of the CPI has raised more questions than answers. As the MPC convenes today, it is crucial that policymakers carefully consider the potential implications of the new inflation metrics on monetary policy decisions and the overall economy.
Dr Mbamalu, a Jefferson Journalism Fellow, member of the Nigerian Guild of Editors (NGE) and Communications Consultant, is the publisher of Prime Business Africa.
Dr. Marcel Mbamalu is a communication scholar, journalist and entrepreneur. He holds a Ph.D in Mass Communication from the University of Nigeria, Nsukka and is the Chief Executive Officer Newstide Publications, the publishers of Prime Business Africa.
A seasoned journalist, he horned his journalism skills at The Guardian Newspaper, rising to the position of News Editor at the flagship of the Nigerian press. He has garnered multidisciplinary experience in marketing communication, public relations and media research, helping clients to deliver bespoke campaigns within Nigeria and across Africa.
He has built an expansive network in the media and has served as a media trainer for World Health Organisation (WHO) at various times in Northeast Nigeria. He has attended numerous media trainings, including the Bloomberg Financial Journalism Training and Reuters/AfDB training on Effective Coverage of Infrastructural Development of Africa.
A versatile media expert, he won the Jefferson Fellowship in 2023 as the sole Africa representative on the program. Dr Mbamalu was part of a global media team that covered the 2020 United State’s Presidential election. As Africa's sole representative in the 2023 Jefferson Fellowships, Dr Mbamalu was selected to tour the United States and Asia (Japan and Hong Kong) as part of a 12-man global team of journalists on a travel grant to report on inclusion, income gaps and migration issues between the US and Asia.
