Nigeria's headline inflation rate surged to 34.80% in December 2024, up from 34.60% in November, according to data released by the National Bureau of Statistics (NBS). The latest figures suggest that another interest rate hike may be on the horizon at the next Monetary Policy Committee meeting in February.

The December inflation numbers are based on the new price index, which was rebased by the NBS to better reflect current consumption patterns. The NBS increased the consumer price index (CPI) basket from 740 to 960 items, providing a more comprehensive picture of the country's economic activity.

The addition of new items to the CPI basket is expected to enhance data accuracy and support more effective planning, according to Olajide Oyadeyi, an economist at Econoday Inc. The NBS will release new inflation figures based on the revised price index at the end of January 2025.

Food and transport costs were the primary drivers of December 2024 inflation, with food inflation easing to 39.84% from 39.93% in November. The holiday season's increased consumer spending also contributed to the inflation rate surge.

Looking ahead, analysts expect inflation to moderate in the second half of 2025, with Samuel Onyekanmi, an analyst at Norrenberger, predicting a slowdown to around 25-27% by year-end. However, the rebasing of the inflation basket adds uncertainty to the outlook, making it challenging to predict the exact trajectory of inflation.

The NBS's efforts to improve the accuracy of its data are significant steps forward in capturing the true breadth of economic activity. As the country navigates the complexities of inflation and economic planning, the revised price index and CPI basket will play a crucial role in informing policy decisions.

The implications of Nigeria's accelerating inflation rate will be closely watched, particularly as the country's monetary policymakers prepare for their next meeting. With the revised price index and CPI basket in place, stakeholders will be eager to see how the new data influences policy decisions and shapes the country's economic trajectory.