Stakeholders Criticize Inflation Rebase and CBN’s MPC Decision Amid Economic Challenges
The recent rebasing of Nigeria’s inflation rate and the Central Bank of Nigeria’s (CBN) decision to maintain the benchmark interest rate at 27.5% have stirred controversy among stakeholders, including shareholders and financial analysts. The National Bureau of Statistics (NBS) reported a sharp drop in inflation to 24.48% for January 2025, down from 34.80% in December 2024. However, many shareholders, especially retail investors, have expressed skepticism, arguing that the statistics fail to capture the real cost of living for Nigerians. Boniface Okezie, a prominent shareholder leader, dismissed the new inflation figures, claiming they are misleading and do not reflect the economic hardships faced by consumers, such as rising food and transportation costs.
Okezie’s concerns extended to the negative impact on businesses, with high operational costs, foreign exchange challenges, and taxation continuing to strain company profits. Shareholders worry that these pressures could lead to reduced dividend payouts, which are crucial for many investors. The persistent economic difficulties are seen as obstacles to attracting long-term investment and fostering market stability. Okezie also criticized the speculative activities of foreign investors, who he believes contribute to market volatility, leaving local investors vulnerable when foreign capital exits.
In defense of the rebasing, economists such as Olatunde Amolegbe argue that the adjustment of the Consumer Price Index (CPI) was necessary to reflect current consumption patterns. Amolegbe explained that while inflation had decreased statistically, this did not indicate a reduction in actual prices but rather a slower rate of price increases. He suggested that the real benefits of the rebasing would be felt over time, as more accurate inflation tracking allows for better policy decisions. Furthermore, he pointed to the recent stability in the foreign exchange market and declining fuel prices as potential signs of improving economic conditions that could boost investor confidence.
Both the NBS and the CBN defended the rebasing process, stressing its importance for providing a more accurate reflection of the economy’s changing dynamics. The Statistician-General, Adeyemi Adeniran, clarified that the new base year of 2024 aimed to address outdated data, while CBN Governor Olayemi Cardoso emphasized the need for caution in monetary policy. Despite mixed reactions, policymakers remain committed to stabilizing the economy through these measures, arguing that they are part of a broader strategy to improve public finances and economic growth, even as many Nigerians question the immediate effectiveness of these policies.
SOURCE: THE SUN