By Isiaq Ajibola

It is indeed a challenging time for Nigerians to believe any positive statistical data relating to income, prices and standard of living due to the hardship experienced by the citizens. When recently the National Bureau of Statistics ( NBS) released the report of the rebased consumer price index(CPI ) which indicated a reduction in inflation from 34.5% in Dec 2024 to about 24% in January 2025, it was reasonably expected that there would be a backslash.

Expectedly, this has come even from well-respected economists and financial analysts who found it inexplicable to unwoven the tie around the “good” figures from the reality of a rising “cost of living” in Nigeria today. Interestingly, this conundrum for analysts is not peculiar to Nigeria. It has happened in most other countries where rebasing was done at one time or the other.

While GDP and CPI rebasing may have aimed at improving data accuracy in a country, it is common that pundits misinterpret or politicize it to look good in the “eye of the public” or simply to win an economic argument and sometimes out of ignorance.
The misinterpretation arises from the myth that GDP growth or inflation figures for a particular period are often linked with economic hardship Sometimes it is asked, “If GDP has increased, why are people still poor?”. ” If the inflation rate has declined, why are prices still high?”

Believability in other countries. Starting from our neighbours, Ghana is no different.

In 2018, Ghana rebased its GDP 2018, which led to a 24.6% rise in the size of GDP. In the previous rebased figure of 2013, it increased the size of their economy by 60%. The opposition and civil society questioned whether the growth was real or politically motivated. Critics argued that the new data made Ghana ineligible for concessional loans, despite persistent economic struggles.
Inflation calculations were also challenged, with some believing they underreported the actual cost of living.
The same thing in Kenya in 2014 GDP Rebasing.
After the rebasing, Kenya’s GDP increased by 25%, leading to its classification as a lower-middle-income country.

The opposition claimed the new numbers were misleading and did not reflect job losses and high living costs. The government faced criticism for losing access to concessional funding due to the upgraded classification.
Many Kenyans felt the GDP rebasing was a “paper exercise” that did not improve their economic conditions.

A similar thing happened in South Africa in their 2021 GDP rebasing
which showed an 11% increase in the size of the economy. Despite the GDP rise, South Africans continued to experience high unemployment and declining household incomes. The government was accused of using statistical adjustments to mask economic mismanagement. The rebasing coincided with political instability, fueling suspicions about the timing.

In far-away China, ongoing – GDP growth figures have been repeatedly accused of an overstatement. Independent economists claim China’s real growth rate is lower than what is officially reported. Western analysts and some Chinese economists argue the government adjusts numbers to meet political goals. There have been reports of local governments inflating economic data to receive more funding from Beijing.

In the United States, there have been instances where national statistics, especially after methodological changes appeared unbelievable or did not align with public perception. These cases often led to debates about whether official data truly reflected economic reality. Eg In 2013 when the U.S. Bureau of Economic Analysis (BEA) changed how it calculated GDP, incorporating intellectual property (IP), Research & Development (R&D), and artistic works (movies, software, patents).
It led to an increase in GDP of about 3% ($560 billion) overnight.
People found it unbelievable. They said that the economy had not actually grown overnight, yet GDP figures suddenly looked much bigger. Many critics argued that this overstated economic strength because intellectual property value is intangible and does not directly translate to job creation or higher wages.

The reality, however, was that while the GDP increase was technically correct under the new methodology, it did not mean Americans were richer or had better jobs.

Why the mistrust?

The reality is that GDP measures economic output, not how wealth is distributed in society. Growth in GDP does not mean automatic improvement in living standards for an individual.
For example, even though Nigeria’s GDP rebase revealed a larger economy in 2014, poverty and unemployment remained high due to structural issues, e.g. corruption, poor infrastructure, reliance on oil, etc. It would be foolhardy, therefore, that there would be a contradiction in the expected figures of rebased GDP that would be released compared to the current standard of living in Nigeria.

The fact is that it is often a mistake for GDP to be taken as a measure of individual wealth, creating unnecessary panic. The same thing applies to inflation figures derived from the consumer price index ( CPI), which underestimates the true cost of living. Inflation statistics are based on average price changes nationwide, where some regions experience higher price hikes due to market instability, import dependence, exchange rate fluctuations, etc.
For example, food inflation may feel higher in urban areas than official CPI figures suggest because of import costs and supply chain disruptions.

In the recently rebased CPI, there was no way inflation would not have gone down due to these reasons
(I) Methodology Changes and updated weighting of the basket of goods and services.

(II) Base Year Change.
The National Bureau of Statistics (NBS) changed the base year from 2009 to 2018, which better reflects current consumer spending patterns.
Older base years tend to overestimate inflation due to outdated consumption weights.

(III) Updated Basket of Goods and Services
The rebased CPI includes newly relevant items like data subscriptions, e-commerce expenses, and modern household goods.
It removes or reduces the weight less frequently.

(iv)Weight Adjustments Based on New Consumption Patterns
The expenditure weightings now reflect Nigeria’s latest consumption habits from household surveys.

Some high-inflation items (e.g., food) may have had their influence reduced, leading to lower overall inflation readings.

Food Inflation particularly is moderate in the new weighting. In the old CPI, food had a higher weight, making inflation figures more volatile.
In the rebased CPI, food’s influence might have reduced relative to services and other expenditures, leading to a lower overall inflation rate.

(v) Also important is that the new base year (2018) likely had lower price increases, making recent inflation appear less severe in percentage terms.

In summary, the fall in inflation figures in the rebased CPI does not necessarily mean prices are dropping—it reflects a more updated and accurate measure of how inflation is calculated.

More importantly, the most potent weapon for destroying statistical figures is a political interpretation of it.

For example, after Nigeria’s GDP rebasing in 2014, some critics argued it was a political move before the 2015 elections, whereas the methodology was verified internationally. It was later found out by investors that the Nigerian economy had grown bigger. Investors in retail businesses like “H- Medix Supermarket” in Abuja would testify today that the retail sector, which basically expanded GDP size in the 2014 rebase figure, is indeed real. The retail store has been expanding its operations from one location to the other.
The only national statistics that seem to have less political interpretation in Nigeria in recent times was the release of living standards statistics, which showed that about 130 million people were dimensionally poor.
This data was released some weeks before the presidential election in 2023. It was a big credit to the Government of President Muhammadu Buhari that the figures were released despite the promise of the government then to lift 100m Nigerians out of poverty.

GDP growth, Inflation and purchasing power.

Nigeria’s rebased GDP of 2014 showed a large economy, but many jobs remain informal.Unemployment remains a major issue, especially for the youth and graduates. For GDP rebasing to be effective, therefore, it must be followed by policies to create jobs and reduce inequality.

The same thing with inflation and purchasing power. For the people to benefit, the government must combine statistical rebasing with policies to stabilize prices and support low-income citizens. A large GDP does not automatically improve infrastructure, healthcare, or social services. Rebased data must inform government policies, not just remain numbers in reports.
Using GDP and CPI rebasing for real change, therefore, entails a more frequent rebasing exercise. Nigeria is often compared with South Africa in GDP & CPI rebasing. The fact is that South Africa releases more frequently with an interval of 5–7 years. Linking rebasing to economic policies therefore entails that the government must act by investing in newly recognized growth sectors, expanding job creation initiatives and strengthening social programs to reduce the impact of inflation instead of creating distrust in Nigeria’s statistical data.

Ajibola, an economist and former Managing Director of Daily Trust, lives in Abuja.