“Nigeria’s Inflation Drops to 24.48% After CPI Rebasing, But Economic Hardship Persists – Cowry Research”

 A New Inflation Narrative or Statistical Illusion?

For years, Nigeria’s inflationary struggles have shaped economic discourse, with double-digit inflation eroding purchasing power and driving up living costs. December 2024 was no different, with headline inflation peaking at a staggering 34.80%, amplifying concerns about economic stability. Businesses, households, and policymakers braced for further turbulence, as rising food prices and currency depreciation compounded economic uncertainty.

According to the Cowrry Research report, however, January 2025 brought a surprising shift—the National Bureau of Statistics (NBS) rebased the Consumer Price Index (CPI), recalibrating the inflation basket to better reflect evolving consumption patterns. The result? A dramatic drop in inflation to 24.48%, a seemingly positive development at first glance. But did this translate to real economic relief for Nigerians?

The Reality Check: Numbers vs. Purchasing Power

Despite the statistical decline, everyday Nigerians felt little to no difference in their cost of living. The prices of essential goods and services remained stubbornly high, reinforcing skepticism about whether this was a genuine economic turnaround or merely a mathematical realignment. In practical terms, purchasing power continued to lag, with wage growth failing to keep pace with price increases.

Monetary Policy at a Crossroads

This shift presents a new challenge for monetary authorities. While the rebasing might improve short-term market sentiment, Cowry Research warns that upcoming policy decisions, such as the 50% hike in telecom tariffs, could quickly reverse any perceived inflationary gains. The Monetary Policy Committee (MPC) now faces a critical dilemma:

• Should it hold interest rates steady to observe how the rebased CPI influences inflation trends?
• Or should it implement a marginal hike (15–25 basis points) to curb inflationary expectations and prevent future shocks?

The success of Nigeria’s inflation management strategy will depend on exchange rate stability, fiscal discipline, and structural reforms aimed at bolstering domestic production and addressing supply-side constraints.

Looking Ahead: The True Test of Inflation Management

In the coming months, markets, investors, and policymakers will closely monitor the inflation trajectory. Will the rebasing provide a more accurate economic outlook, or will it mask underlying structural weaknesses? More importantly, will Nigerians eventually feel relief in their daily expenses, or will inflation continue to dictate economic hardship?

As history has shown, inflation in Nigeria is never just about the numbers—it’s about the lived realities of its people. The road ahead remains uncertain, but one thing is clear: statistical adjustments alone cannot fix economic challenges without tangible improvements in purchasing power and economic productivity.

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