The National Bureau of Statistics (NBS) undertook a significant rebasing of inflation indices, a crucial step in ensuring that price references and expenditure weight align with contemporary economic realities. This adjustment introduces a revised basket of goods and services that better reflects current consumer spending patterns. The update enhances the accuracy of inflation assessments and provides a more nuanced understanding of price movements across various sectors.

Inflation Trends and Key Metrics

On a year-on-year basis, Headline Inflation stood at 24.48%, a significant decline from 34.80% in December 2024. Food Inflation remained the primary driver, recording 26.08% year-on-year (December 2024: 39.84%), while Core Inflation — which excludes volatile agricultural and energy prices — came in at 22.59% (December 2024: 29.28%). On a month-on-month basis, Headline Inflation surged to 10.68% (December 2024: 2.64%). Food Inflation printed at 10.33% (December 2024: 3.21%), and Core Inflation spiked to 10.87% (December 2024: 2.24%). Notably, these fluctuations do not necessarily indicate a genuine increase or reduction in the price level of goods and services but are a consequence of the recalibrated base year and updated methodology.

Outlook

In February 2025, we foresee a slight moderation in Core Inflation. This anticipated reduction is expected to be driven by the relative stability or slight appreciation of the Naira, which should alleviate pressures by lowering the costs associated with imported raw materials and goods. Furthermore, the stability in energy prices is projected to contribute positively to this trend.

Food Inflation – we predict a modest decline spurred by the waning of seasonal demand pressures. However, several structural challenges persist, particularly in the northern regions, including ongoing security issues, inadequate transportation infrastructure, and suboptimal storage facilities, which may impede the potential for a more significant decrease in food prices.

Policy Expectation

The Monetary Policy Committee convened for its 299th session and its inaugural meeting of 2025 on February 19–20, 2025. We anticipate that the committee will adopt a wait-and-see approach during the meeting.

Click here, “January 2025 Inflation – Festive Demands Mask Gains in Naira Appreciation”, to view the full report.