IMF says Nigeria inflation figures have for years been wrong

Nigeria has been using outdated figures to calculate consumer price indices for years, meaning its inflation numbers for years have likely been misleading.

– A key point to note

The International Monetary Fund (IMF) criticized the standards used by the National Bureau of Statistics to compute Nigeria’s monthly consumer price changes in its recently released report, describing the base figures used by the National Bureau of Statistics as “severely outdated”.

The IMF said the NBS figures date back to 2003 and 2004.

– Why this matters

The IMF’s indicting review of the NBS computations means Nigeria’s inflation numbers have been largely lower than reality, a concern many have raised over years. The likelihood of wrong figures means government responses in the past have been wrong-headed, failing to bring required relief to citizens.

It could be pointed to one of the reasons prices rises persisted while the government continued to claim things were not as bad.

– Learn more

The consumer index is used to rate inflation by tracking the changes over time in the prices paid by consumers for a basket of goods and services.

The basket’s composition and weighting are usually based on surveys of household or family expenditure habits. The NBS last took the survey in 2018 but rather still prefers to rely on the older 2003/04 survey weighting.

According to the IMF report, relying on the 2003/04 National Expenditure Survey by the NBS does not indicate current expenditure patterns and is therefore flawed.

“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 basket are based on expenditures derived from the 2003/04 National Consumer Expenditure Survey,” IMF said.

“The weights are severely outdated and are not representative of current expenditure patterns. Outdated weights can introduce a bias into the index.”

In January, Nigeria’s inflation rate ticked upwards to 21.82 percent from 21.34 percent in the previous month.

IMF has advised the NBS to use new weights from the more recent 2018 National Household Living Standards Survey as its basis for the country’s inflation figures and assured to support Nigeria update its CPI.

“The update of the CPI—using new weights from the 2018 National Household Livings Standards Survey—is still ongoing,” the organisation said.