NBS GDP & CPI rebasing plans near completion

Event: The Nigerian Economic Summit Group (NESG) collaborated with the National Bureau of Statistics (NBS) to sensitise the public on the imminent rebasing of the Consumer Price Index (CPI) and Gross Domestic Product (GDP). Below are the key takeaways from the event

GDP

• The proposed GDP base year is 2019 (vs 2010 currently). 2019 is a preferred base year because economic activities were relatively stable within the period, compared to subsequent years disrupted by the impact of COVID and policy shifts. 

• The rebased GDP is expected to capture new segments such as the digital economy, activities of pension fund administrators, the National Health Insurance Scheme (NHIS), the Nigerian Social Insurance Trust Fund (NSTIF), activities of modular refineries, domestic households as employers of labour and coverage of illegal and hidden activities. 

• The rebased GDP is expected to be launched in January 2025.

Inflation

• The proposed base year for inflation computation is 2024. The year was proposed to capture the structural changes driven by the removal of subsidies on FX and PMS. 

• The constituents of the inflation basket are expected to expand from 740 to 960.

• The updated 2018 classification system will replace the current 1999 version. This change will increase the number of divisions from 12 to 13.

• Data collection processes will be digitised for improved efficiency and accuracy.

• Adjustments to weightings are detailed in the table below.

• In addition to the regular inflation indexes, the NBS will introduce special indexes at both the state and national levels. These include the services, energy, farm produce, and goods indexes.

In our view, the proposed rebasing will drive improved capturing of economic activities and support planning initiatives. We also expect the following.

• The rebasing is likely to shrink the size of the informal economy.

• The rebasing is also likely to result in a significant increase in the reported size of the economy.

• Ratios benchmarked to GDP, such as debt-to-GDP and tax-to-GDP, are expected to adjust due to the implied expansion in GDP size. In particular, select debt sustainability ratios are likely to improve.

• The re-weighting of the CPI basket may result in a reduction in the impact of food and non-alcoholic beverage price changes on the overall headline inflation reading. 

• Housing, water, electricity, gas and other fuels are likely to have a lesser impact on future core inflation readings due to the re-weightings. 



• Transport and restaurants & accommodation services are likely to have a more pronounced impact on future inflation readings due to the re-weightings. 

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