Afrinvest Questions Inflation Rate, Seeks Clarity on Reference Period
One of Nigeria’s top-notch investment firms headquartered in Lagos, Afrinvest Limited, has raised questions about Nigeria’s headline inflation data released by the statistics office last week.
MarketForces Africa reported that the investment firm had projected that the inflation rate for December would print at 33.6% on account of base effects and year-end spending.
However, the inflation rate for the month was reported at 15.15%, a development that forced Afrinvest to ask the National Bureau of Statistics (NBS) where the figure comes from, citing the reference period used to prepare the previous consumer price index.
The firm understands that the statistics office adjusted reference period data in order to achieve a 15.15% inflation surge in December, a number that came in sharp contrast to 30% Broadstreet projections.
NBS said inflation rose to 15.15% in December from 14.45% in the comparable month in November despite a significant jump in year-end spending.
The report indicated that the consumer price index rose modestly to 131.2 points from 130.5 in November, while year-on-year headline inflation declined to 15.15% from 17.33%, signalling improving price stability toward the year-end, supported by easing cost pressures and favourable base effects.
On an annual basis, the disinflation trend was even more pronounced. Headline inflation in December 2025 was 19.65 percentage points lower than the 34.80% recorded in December 2024, highlighting a significant improvement in the inflationary environment despite the revised base year, according to Cowry Asset Management Limited research subsidiary.
Analysts highlighted that this reflects better supply conditions and reduced pass-through from earlier shocks. Month-on-month inflation also moderated, with headline inflation easing to 0.54% in December from 1.22% in November, indicating a slower pace of price increases and improved market supply dynamics.
At the same time, Nigeria’s food inflation saw a notable decline, falling to 10.84% year-on-year from 39.84% in December 2024.
Month-on-month, food prices decreased by 0.36%, driven by lower costs for key staples such as tomatoes, garri, eggs, vegetables, beans, and grains. However, the twelve-month average food inflation remained elevated at 22.00%, highlighting ongoing structural pressures.
Core inflation, which excludes volatile agricultural and energy prices, also moderated. Year-on-year, it declined to 18.63% from 29.28% in December 2024, while month-on-month growth slowed to 0.58% from 1.28% in November, reflecting softer short-term cost pressures.
Despite this, the twelve-month average core inflation remained high at 23.49%, pointing to persistent structural inflationary risks. Inflation trends varied across states in December 2025.
In its commentary note, Afrinvest Limited said the bureau shifted from a single-month reference period to the average of all 12 months of 2024 as the reference period.
“This approach of maximising the index reference period makes the CPI of all of 2024 equal to an average of 100 rather than a single month period such as December being 100.
“The new reference approach aligns with the Consumer Price Index Manual of the IMF and ECOWAS, providing a smoother and more representative base period for the CPI.
“As a result of the exercise, the December 2025 CPI report was published with revised monthly CPIs for all the months of 2024 (new 2024 CPI average is 100.0 vs 101.1 previously)”, the investment firm said.
Afrinvest said timing of the revision coincides with what would have been an unavoidable spike in the annual December 2025 inflation if the previous reference approach (December 2024 = 100) had been maintained.
“As we noted in our earlier inflation report, December 2025 headline inflation was projected to jump sharply to 33.6% year on year from 14.5% in November, largely driven by the base effect. We also projected m/m headline inflation at 2.4% from 1.2% in November”.
The figure released by the statistics office came in sharp contrast to the investment firm’s projections with wider gap that reduces confidence level in the figures. Analysts observed some fine-tuning in the base numbers, which later turn to be average of all the months.
“We welcome the adoption of a more robust reference period that aligns with international standards, as it is expected to reduce the risk of anomalous base-effect shocks that can distort inflation readings.
“We also applaud the NBS for engaging the public on these changes and for maintaining the flexibility to make adjustments when necessary”.
Afrinvest said it would have welcomed more information on how the NBS derived the revised 2024 CPI series, particularly the raising factor used for the re-referencing.
The firm said this is important to confirm whether the new CPI series for 2024 was derived from the old one. Under the old series, the CPI for November 2024 (114.0) was higher than December (100.0) but this relationship reverses under the revised series (111.2 vs 113.9).
“This suggests that December may have received special adjustment not applied to previous months. One way to examine this is to compare m/m changes in the old and new 2024 series”.
The firm noted that from January to November, the month on month ratios appear consistent, but December moves in the opposite direction.
It noted that while this preserves the m/m inflation path for most of 2024, the December adjustment could influence the exact CPI levels for all months in 2024 and affect y/y inflation in 2025, without materially affecting m/m inflation within 2024, except for the November–December period.
The point is not to disagree with what has been achieved – in fact the intention is commendable, Afrinvest said in its commentary note.
The firm said while it is true that the issues that informed the 2024 reference period change are likely to not persist going forward, it does not negate the need for clarity to build confidence for the 2025 annual reading.
Looking ahead, Afrinvest expressed view that it expects statistical noise around the inflation data to be limited, allowing for more meaningful readings, particularly for annual inflation.
“While the updated data suggests an unusual 2.8% m/m deflation in January 2025, we view the movement as residual statistical effects rather than a shift in underlying price dynamics.
“For January 2026, we expect mild upward pressure from annual price adjustments in services and consumer-facing sectors, including housing and rent, healthcare, education and medical services.
“However, favourable FX dynamics and soft food inflation should help keep overall price pressures contained.
“That said, in the absence of a monthly price increase, headline inflation will print at 18.5% y/y because of the base effect. Given our expectation of 0.7% m/m reading, we project an annual inflation of 19.3%,” Afrinvest concludes. SCOA Climbs as Investors Confidence Rises, Hits 52-Week High
