As 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 distinguished communication scholar, journalist, and entrepreneur with three decades of experience in the media industry. He holds a Ph.D. in Mass Communication from the University of Nigeria, Nsukka, and serves as the publisher of Prime Business Africa, a renowned multimedia news platform catering to Nigeria and Africa's socio-economic needs.
Dr. Mbamalu's journalism career spans over two decades, during which he honed his skills at The Guardian Newspaper, rising to the position of senior editor. Notably, between 2018 and 2023, he collaborated with the World Health Organization (WHO) in Northeast Nigeria, training senior journalists on conflict reporting and health journalism.
Dr. Mbamalu's expertise has earned him international recognition. He was the sole African representative at the 2023 Jefferson Fellowship program, participating in a study tour of the United States and Asia (Japan and Hong Kong) on inclusion, income gaps, and migration issues.
In 2020, he was part of a global media team that covered the United States presidential election.
Dr. Mbamalu has attended prestigious media trainings, including the Bloomberg Financial Journalism Training and the Reuters/AfDB Training on "Effective Coverage of Infrastructural Development in Africa."
As a columnist for The Punch Newspaper, with insightful articles published in other prominent Nigerian dailies, including ThisDay, Leadership, The Sun, and The Guardian, Dr. Mbamalu regularly provides in-depth analysis on socio-political and economic issues.
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