The International Monetary Fund, IMF, has said the index weights and basket deployed by the National Bureau of Statistics, NBS, for the monthly consumer price index were extremely outdated.
It was noted that what the NBS presents does not provide a true representation of expenditure patterns.
In its latest report, titled “Nigeria: 2022 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director for Nigeria,” the IMF stressed the need for the NBS to use new weights from the 2018 National Household Living Standards rather than the 2003/04 National Consumer Expenditure Survey.
It warned that outdated weights could lead to biases in the index presented by the NBS.
The IMF also said there was an ongoing effort for an updated producer price index but noted that the funding for it was uncertain, adding that the second African Regional Technical Assistance Centre in West Africa intended to support Nigeria in the CPI update and improvement.
The report read: “The official monthly consumer price index, or CPI, a composite of urban and rural price data, is available on a timely basis.”
“However, the index weights and baskets are based on expenditures derived from the 2003–04 National Consumer Expenditure Survey.
“The weights are severely outdated and are not representative of current expenditure patterns.
“Outdated weights can introduce a bias into the index.
“The update of the CPI—using new weights from the 2018 National Household Living Standards Survey—is still ongoing.
“The compilation of an updated producer price index is ongoing, but funding for the survey is uncertain.
“AFW2 plans to provide additional technical assistance to support the CPI update and improvements to Nigeria’s price statistics.”
In its most recent “Consumer Price Index” for January 2023, the NBS said in January 2023, the headline inflation rate rose to 21.82 percent, compared to the December 2022 headline inflation rate of 21.34 percent.
January 2023’s inflation rate of 21.82 percent is a 6.22 percentage point increase from January 2022’s rate of 15.60 percent.
The NBS stated that January’s inflation was driven by increases in the prices of food items such as bread and cereal, potatoes, yams and tubers, vegetables, meat, and rent.