When the NBS rebased the Consumer Price Index in February 2025, and headline inflation fell overnight from 34.80% to 24.48%, yields compressed, and fixed income rallied. A question that should have been straightforward became almost impossible to answer: what is cash actually earning in Nigeria after inflation?
We know what the commentary said. Statistical fix or economic illusion. Cost of living still high. Basket weights shifted. All true, all well-covered. But nobody did the obvious next thing: build the bridge between the old series and the new one, then show what a continuous 15-year picture of Nigerian real returns actually looks like. We did.
The problem with two CPI series
The old NBS CPI ran from a November 2009 base, 740 items weighted by the 2003/04 Nigeria Living Standards Survey. The new methodology uses a 2024 average base, 934 items, and 2023 weights. Food and non-alcoholic beverages dropped from 51.8% to 40.1%. Restaurants and accommodation surged from 1.2% to 12.9%. A 13th COICOP division was added (Insurance and Financial Services). That alone tells you how much the consumption basket has shifted.
These are legitimate improvements. Nigeria’s spending patterns have genuinely changed since 2009. Nobody disputes that.
The problem is continuity. NBS published no officially chain-linked historical series. The old index ends in December 2024. The new one picks up in January 2025. Month-on-month rates don’t match across the boundary. Stops & Gaps documented a particularly egregious discontinuity: the rebased index implies prices fell 12.3% in a single month in December 2024. The largest actual single-month decline since 1995 was 3.5%.
For anyone maintaining a time series (pension fund benchmarking, fixed income attribution, real return measurement), the data is broken. Every analyst in Lagos knows this. Most shrugged and moved on.
Chain-linking: what we built and why
We followed the IMF CPI Manual, Chapter 9, for linking series across base-period changes. December 2024 is the overlap month where both old-base and new-base CPI levels exist. The chain-linking factor comes out at 0.11523. We rescaled the entire old series onto the new base.
The result: 204 continuous monthly CPI observations from February 2009 to January 2026. One hundred and ninety-one back-tested months on the old base, spliced to 13 live months on the new base. No interpolation. No estimation. Month-on-month rates are preserved through the splice point, and every calculation is reproducible from published NBS and CBN data.
We paired this CPI series with CBN 91-day T-bill stop rates from primary auctions to construct the VNG-CRR, the Venoble Nigeria Cash Real Return Index. Two inputs per month. NBS CPI level. CBN stop rate. Fisher equation. All compounds into an index.
The headline: over 204 months, Nigerian cash earned +9.48% annualised in nominal terms and −5.48% annualised in real terms. This is consistent, cumulative, and structural purchasing power destruction.
Put it differently. N1 million placed in 91-day T-bills in February 2009 would be worth roughly N4.7 million as of January 2026 in nominal terms. Adjust for what that money can actually buy, and the real value is closer to N380,000. The T-bill investor multiplied his digits and shrank his wealth.
Why this matters now
Start with pension fund allocation. Nigeria’s pension assets reached N26.66 trillion as of October 2025. Roughly 60% (c.N16 trillion) sits in FGN securities. If the annualised real return on government paper has been negative for 15 consecutive years, what does that mean for 10 million contributor accounts? The OECD flagged this in its 2024 pension report using 2023 data. Pension funds in Nigeria, Angola, and Egypt, where more than half of assets sit in bills and bonds, delivered negative real returns. PenCom raised equity limits in February 2026: RSA Fund I from 30% to 35%, RSA Fund II from 25% to 33% and while this is indeed a step in the right direction, it is not enough.
Then there is the visibility problem. Under the old methodology, a 91-day bill at 18% against 34.8% inflation was obviously underwater. Under the new CPI, the same bill at 15% against 15.15% inflation looks like a break-even. Did real returns improve, or did the statistical agency change the yardstick? In our view, both. Inflation has genuinely decelerated: monthly CPI growth dropped below 1.0% for several consecutive months in H2 2025. But the rebase also flatters the comparison by c.10 percentage points. Without a continuous series, you cannot separate the two effects.
And the sign has flipped. This is not speculation. From August 2025 through January 2026, the VNG-CRR recorded six consecutive months of positive real returns. January 2026 was the strongest at +4.39% real. Month-on-month CPI fell 2.88% while the nominal T-bill return was 1.38%. The real index climbed from
984 to 1,027, above its inception base of 1,000 for the first time.
After 15 years of negative returns, real returns have turned positive. Whether that holds is the question nobody can answer yet.
What we do not know
We don’t have a strong view on the persistence of the disinflation trend. The December 2025 CPI base effect is messy. The rebased December 2024 level was set at 100, which creates arithmetic distortions in year-on-year comparisons as that month rotates out. Headline YoY inflation could spike artificially in December 2025 data even if underlying prices remain stable. Anyone anchoring allocation decisions to year-on-year headline numbers will get whipsawed.
We also cannot tell you whether the new CPI basket accurately captures the cost-of-living reality for the median Nigerian. Restaurants and accommodation at 12.9% may reflect urban middle-class spending in Victoria Island and Wuse. It does not reflect what a civil servant in Kano or a smallholder farmer in Benue pays for food and transport. The CPI measures what it measures. It is not a cost-of-living index. That distinction matters more than most post-rebase commentary acknowledged, and it is the gap a continuous real return series is designed to fill.
The allocation question
Here is what the data does tell you. Over 204 months, the real return hurdle rate (what an alternative investment must beat just to match cash in purchasing-power terms) has been low. Negative, in fact. Any asset class generating positive real returns has beaten cash. Equities: the NGX ASI returned 51.19% in 2025. Real estate in Lekki and Abuja CBD. Dollar-denominated instruments accessed through NAFEM. All cleared the hurdle.
With real yields now positive, the calculus shifts. Cash is no longer guaranteed wealth destruction. But 15 years of compounded losses do not reverse in six months. The real index is at 1,027. It needs sustained positive real returns to recover the purchasing power lost over the prior decade.
For pension fund administrators and asset managers, the implication is straightforward: measure everything against the real return on cash. Not nominal yields. Not headline inflation. The actual, chain-linked, continuously compounded purchasing-power return. If your portfolio is not beating that number, you are losing money regardless of what the nominal statement says.
Why independent benchmarks matter
Nigeria has the largest economy in Africa and the largest pension assets on the continent. Its data infrastructure for institutional investors is among the weakest. South Africa has inflation-linked bonds, a real repo rate published by the SARB, and a mature index ecosystem. Nigeria has a CPI series with a structural break and no official chain-linked alternative.
The gap is not in analytical capacity. There’s no shortage of Nigerian research firms producing excellent work. The gap is infrastructure. Auditable, rules-based benchmarks that any market participant can verify.