This week, we spotlight the December 2025 Consumer Price Index (CPI) report released by the NBS, with a focus on the updated methodology for estimating the CPI.
Notably, 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 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% y/y from 14.5% in November, largely driven by the base effect. We also projected m/m headline inflation at 2.4% (November: 1.2%).
In its latest CPI report, NBS reported headline inflation of 15.15% y/y for December 2025 (November: 17.33%), the lowest annual inflation in over two years based on the revised dataset. The reading implies that disinflation trend has persisted for nine consecutive months. On a m/m basis, prices rose by only 0.5% in December (Afrinvest projection: 2.4%, November: 1.2%; 2025 average ex-January: 1.6%), marking the slowest monthly increase since the unusual 2.8% m/m deflation in January 2025, assuming continuity of the CPI series following the revision.
According to the NBS report, Food prices decreased by 0.4% m/m in December 2025 (November: +1.1%), resulting in a 10.8% y/y increase – lowest y/y in over two years and below 2025 average of 22.5%. The decline in the food basket inflation reflects decrease in the price of farm produce by 0.4% m/m (November: +0.8%), while imported food prices rose 2.8% m/m (November: +0.6%). In similar fashion, core inflation printed at 0.6% m/m and 18.6% y/y, the softest monthly print in eleven months (January 2025 : -0.9%) and the lowest y/y change in more than two years. Meanwhile, energy prices rose 2.7% m/m in December 2025 against 1.1% previously.
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.
That said, we would have welcomed more information on how the NBS derived the revised 2024 CPI series, particularly the raising factor used for the re-referencing. 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. From January to November, the m/m ratios appear consistent, but December moves in the opposite direction.
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. Furthermore, 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, we expect 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 monthly price increase headline inflation will print at 18.5% y/y because of base effect. Given our expectation of 0.7% m/m reading, we project an annual inflation of 19.3%.
Afrinvest
