Why the IPC overflow may not sustainably reduce inflation: Barde

Why the IPC overflow may not sustainably reduce inflation: Barde

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As the National Statistics Office (NBS) prepares to reveal the Nigeria Consumer Price Index (CPI), analysts and investors maintain a close surveillance.

The overflow is expected to update the reference year to track inflation and adjust the weights of goods and services, improve data accuracy. However, economic analysts warn that changes may not sustainably affect Nigeria's inflation perspective.

The IPC overflow exercise will change the base year from 2009 to 2024, which reflects changes in household consumption patterns and economic realities. In addition, the basket of tracked goods and services will increase from 740 to 960 articles, with significant changes in categories weights.

According to Muhammed Jubrin Barde, one of the most notable settings is the reduction in the weight assigned to non -alcoholic food and drinks, which will fall from 51.8% to 40.1%. On the contrary, weights for transport, health and accommodation services will increase, better capture current expenditure trends.

Barde is economist and political. He is former candidate for governor of the Popular Democratic Party (PDP) in the state of Gombe.

He said that despite the adjustment, food inflation remains a dominant concern in Nigeria, with an amazing increase of 39.84% year -on -year to December 2024.

Factors such as insecurity, currency depreciation, supply chain interruptions and climatic shocks continue to increase food prices.

“Food weight reduction does not mean that food inflation is no longer critical,” said Barde. “It simply means that other factors, such as the increase in transport and medical care costs, will now play a more prominent role in the calculation of inflation.”

In an opinion he shared, Barde said that the recovered CPI is expected to provide a more balanced and integral vision of inflation in Nigeria.

Identified the implications to include:

A more balanced inflation image: The overflow reflects the evolutionary spending patterns of Nigerian households. The weight gain for transport, health and accommodation services recognizes the growing importance of non -food expenses. This will provide a more complete and balanced vision of inflation.Inflation figures reported potentially lower: Since food inflation has been significantly greater than inflation in other categories, reduce its weight could lead to a marginally lower general inflation figure. However, this does not mean that prices are stabilized, only that the composition of inflation will change.Better policy decision making: With more precise data, policy formulators can develop more effective interventions. For example, if transportation and medical care emerge as stronger inflation drivers after realization, tax and monetary policies may need to address the infrastructure and costs of the medical service more aggressively.

While overwhelming is a welcome statistical improvement, Barde warned that he will not address the fundamental promoters of inflation in Nigeria. Volatile exchange rates, subsidy eliminations and persistent structural bottlenecks remain key challenges.

“Even with a lower inflation rate due to weight adjustments, the cost of the living crisis will persist unless the underlying economic problems are addressed,” said Dr. Barde.

As Nigeria awaits the release of the updated figures of the CPI, the excellent exercise should be seen as a step towards more precise economic data instead of a solution to inflation. Policy formulators and companies must remain focused on addressing structural problems that promote prices to achieve lasting economic stability.

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