The National Bureau of Statistics (NBS) uses weights that are “severely out of date,” according to the International Monetary Fund (IMF), when calculating the monthly consumer price index (CPI).
The CPI tracks changes in consumer prices over time for a basket of goods and services and uses those changes to calculate inflation.
The contents and weighting of the basket are typically determined by surveys of personal or family spending patterns.
Nigeria’s inflation rate increased significantly in January, rising from 21.34 percent to 21.82 percent.
The IMF claimed that Nigeria’s 2022 Article IV consultation report that was just published that the NBS inflation index does not accurately reflect current spending patterns.
It issued a warning that biased inflation indexes may result from outdated weights.
“The official monthly consumer price index (CPI), which combines price data from urban and rural areas, is readily available. The 2003–2004 National Consumer Expenditure Survey was used to determine the expenditures used to calculate the index weights and basket, according to the IMF.
“The weights are seriously out of date and do not reflect recent spending trends. An index’s bias may be introduced by outdated weights.
The international financial organization urged the NBS to switch from using weights from the 2003/04 National Consumer Expenditure Survey to new weights from the 2018 National Household Living Standards Survey.
It stated that while the funding for an updated producer price index is still being collected, it is uncertain.
The IMF gave Nigeria its word that it would assist with updating its CPI.
The 2018 National Household Living Standards Survey provided new weights for the CPI update, which is still in progress, according to the organization.
“An updated producer price index is still being put together, but funding for the survey is uncertain.
The Africa Regional Technical Assistance Center West 2 (AFW2) plans to offer more technical help to help with the CPI update and improve Nigeria’s price statistics.