The recent revision of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS) may boost investor confidence in the country’s economy but may not reduce the inflation rate of Nigerians.
This is the doctor’s view. In an exclusive interview with Nairametrics, the Chief Executive Officer of SPM Professionals, Paul Alahe, clarified that the reported reduction in inflation rate from 34.80% to 24.48% is not a real reduction in inflation but a statistical change due to the change in the base year from 2009 to 2020.
“It has not reduced inflation” It is wrong to say that inflation has come down from 34% to 24%. That would be a false narrative. "If inflation is really coming down, we should be seeing that reflected in prices, but we are not seeing that," he said.
Alaye said the NBS is adjusting the economic fundamentals, which will certainly lead to a correction in the inflation rate.
“Today’s figures do not mean that inflation has come down,” the agency said, “We will no longer refer to 2009 as the base year; now, we are starting to look ahead to 2024. They will also have a different (lower) number.”
Despite the statistical change, Nigerians should not expect immediate relief from high food and commodity prices. Alae said the fundamentals of the economy remain unchanged.
“If people go to the market, the prices of goods and services will be higher.” This does not mean that if you go to the market tomorrow, food prices will go up; our reality remains the same.
This means that despite the seemingly better figures, inflation remains a persistent problem for the average Nigerian.
Business confidence could improve
While the new CPI data may not have an immediate impact on household spending, it could have a positive impact on the sentiment investment. Low inflation can make Nigeria more stable and attractive for domestic and foreign investors.
“Also, for those looking to invest in our country, if they see inflation coming down, they will be confident, and we want that too,” Ala added.
Business confidence could improve
While the new CPI data may not have an immediate impact on household spending, it could have a positive impact on investor sentiment. Low inflation can make Nigeria more stable and attractive for domestic and foreign investors.
“Also, for those looking to invest in our country, if they see inflation coming down, they will be confident, and we want that too,” Ala added.
Other experts also shared their views
The Director of the Centre for Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, explained the implications of the restructuring and warned against premature celebrations.
“It is important to note that the sharp decline in the inflation rate does not necessarily mean a slowdown in the growth rate of the overall economy, not a slowdown in inflation.
Similarly, the President of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Chiniel Almona, stressed that the high inflation rate will not completely solve the economic problems facing Nigerians.
“High inflation is not the answer to the rising cost of living as food and transport are still high for most Nigerians, meaning that living standards will not improve unless the prices of essential commodities are reduced. While the inflation rate provides policymakers with a clear picture of the economic situation, it is not the cause of the rise in the cost of living. Government must take concrete steps to address the inflation problem and improve economic stability.
Concerns about economic hardship
From a broader perspective In a statement, Dr. Nasir Aminu, a Senior Lecturer in Economics and Finance and Senior Research Fellow in the Department of Higher Education at Cardiff Metropolitan University, stressed that the exchange rate adjustment will not change the situation of the Nigerian economy.
“The question is, what is the reality on the ground? It is only a matter of perspective.”
His remarks expressed concern that while statistical changes may provide a more accurate assessment of the monetary system, they do not address the underlying problems that lead to high inflation in the economy.
Additional Information
The National Bureau of Statistics (NBS) has changed its methodology for calculating inflation, resulting in a significant reduction in the inflation rate from 34.80% in December 2024 under the previous methodology.
Post a Comment