Bismarck Rewane, analysts criticise NBS inflation report

Bismarck Rewane’s investment firm, Financial Derivatives Company (FDC), has criticised the Consumer Price Index (CPI) report released by the Nigerian Bureau of Statistics (NBS).

The company said the basket used to weigh commodity prices is outdated and needs to be changed in order for the consumer price index to reflect the market realities.

The NBS CPI report had stated that core inflation and food inflation had declined in the month of April, a statement that surprised many analysts as prices of food and services had gone up in the same month.

The bureau said headline inflation slightly dipped to 18.12 percent in April from 18.17 percent in March, while food inflation dropped from 22.95 percent of March, to 22.72 percent the next month.

This makes it the first decline since August last year, as the President Muhammadu Buhari-led administration has been struggling to curb the rising inflation. Despite the report of marginal decline, analysts at Financial Derivatives said the figures are wrong.

The analysts stated that the report doesn’t reflect market realities because the market basket or parameters used is 12-years-old, and the international standard is to updated every five years.

“It is often advised that a country reconstitute its inflation basket periodically (5-years interval). This is to capture the changing consumption patterns of households.

“In Nigeria, the last time the basket constituents were revised was in 2009. This could lead to a significant bias in the measure of inflation and ultimately affect policy decision making.

“To eliminate this bias, it is important that the CPI basket is revised to reflect current market and economic realities”, the Derivatives analysts stated.