NBS inflation index extremely outdated, says IMF

By Business AM

The index weights and basket presented by the National Bureau of Statistics (NBS) for the monthly consumer price index are extremely outdated, according to the International Monetary Fund (IMF).

The major financial agency of the United Nations made the assertion in a recent  report titled ‘’Nigeria: 2022 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Nigeria’.

According to the report, what the NBS presents is neither a current nor a true reflection of expenditure patterns in the most populous black nation. The implication of this, it warned, is that it can result in bias in the index presented by the NBS.

To this end, the IMF emphasised the need for the NBS to use new weights from the 2018 National Household Livings Standards rather than from the 2003/04 National Consumer Expenditure Survey.

The report read, “The official monthly consumer price index (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 The weights are severely outdated and are not representative of current expenditure patterns. Outdated weights can introduce a bias into the index.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 Livings 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.”

The IMF also disclosed that there is an ongoing effort for an updated producer price index,but noted that the funding is uncertain.

It added that the second African Regional Technical Assistance Centre in West Africa intends to support Nigeria in the CPI update and improvement.

The NBS, in its most recent ‘Consumer Price Index’ for January 2023, the headline inflation rate rose to 21.82 per cent,  a significant increase of 0.47 percentage points compared to 21.34  per cent recorded in the previous month of  December 2022,

Similarly, the headline inflation rate was 6.22 percentage  points higher year-on-year against 15.60 per cent recorded in December 2021, indicating an annual increase  when compared to the same month in the preceding year of January 2022.