Introduction
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On May 4, 2025, a significant chapter in Somalia’s economic story was penned with the launch of a modernized Consumer Price Index (CPI) by the Somalia National Bureau of Statistics (SNBS). This moment not only marked the introduction of the first nationally representative CPI, but also demonstrated a commitment to economic inclusivity. Shortly thereafter, on May 22nd, SNBS unveiled its inaugural quarterly CPI report under this innovative framework—a report rich in insights, analyses, and details that delved into price dynamics across the nation.
Previously, the CPI was limited in scope, primarily focusing on Mogadishu—an oversight that left significant regions underrepresented. Northeastern State and North Western State of Somalia had compiled CPI statistics separately, albeit using outdated methodologies. This shift toward a cohesive national CPI not only enhances data quality but also fosters transparency and relevance in national planning and policymaking. As the famous economist Milton Friedman once said, “Inflation is always and everywhere a monetary phenomenon.” Understanding the CPI is, therefore, vital for comprehending economic shifts, particularly in Somalia, where its twists and turns deeply affect households across all strata.
The CPI serves as a barometer of economic performance, charting how prices for essential goods and services fluctuate over time. This directly impacts the daily lives of Somali families. By covering all Federal Member States (FMS) using standardized data collection methods, the SNBS is laying the groundwork for an all-encompassing statistical system. This development opens doors to evidence-based national planning and policymaking and nurtures knowledge-based governance. Ultimately, it points towards a future of widespread national development.
Transition to a Modernized CPI System
What does a modernized CPI look like? It essentially measures the average change in retail prices paid by consumers for a fixed selection of goods and services, making it the foremost method for tracking inflation trends. It’s a tool that enables policymakers, businesses, and analysts to read the economic landscape. Consider it the compass that guides decisions affecting social welfare, economic strategies, and fiscal policies. Whether it’s adjusting tax brackets or determining wage negotiations, the importance of the CPI cannot be overstated.
But the implications extend beyond the government. Enterprises utilize CPI data to predict market demand and strategize pricing, while investors hinge their decisions on macroeconomic stability reflected in these statistics. Even international development partners rely on CPI to synchronize aid disbursements with tangible economic conditions, ensuring their initiatives are both impactful and relevant.
Since January 2025, the SNBS has been releasing CPI statistics that reflect new consumption weights derived from the 2022 Somalia Integrated Household Budget Survey (SIHBS). This update includes alignment with the internationally recognized Classification of Individual Consumption According to Purpose (COICOP 2018), replacing the outdated 1999 version. This strategic upgrade bolsters data quality and comparability, placing Somalia on a path that mirrors global best practices.
The introduction of this revamped CPI framework signifies a vital turning point, closing statistical gaps and laying the foundation for a more informed economic strategy. By encompassing all FMSs, the new CPI provides a more nuanced understanding of price movements and household consumption, ensuring that estimations reflect the realities of communities beyond the capital. Monthly surveys are designed to capture price data from diverse locales, enriching our understanding of inflation across Somalia.
This modernization allows for better tracking of changes in household consumption behaviors. For instance, there’s been a notable uptick in spending in areas like telecommunications. The transition to Computer-Assisted Personal Interviewing (CAPI) systems, moving away from traditional paper methods, enhances the reliability and speed of data collection—reducing errors while elevating the quality of statistical outputs.
The latest CPI data from the first release under this modernized system, covering the twelve months leading to March 2025, unveils significant national and regional inflation trends. For example, the national CPI increased by 3.9% year-on-year. It’s interesting to note that the most considerable price hikes were in transportation (8.0%) and accommodation services (6.5%), against a backdrop of notable declines in sectors like telecommunications, highlighting varied dynamics shaping consumption.
Understanding these nuances is crucial. Inflation doesn’t bear the same weight for all households. Low-income families, who allocate a large share of their earnings toward essential needs like food and transportation, feel the impact disproportionately. As prices rise, these families often have to make sacrifices in other critical areas—healthcare or education, for example. In this context, the regular release of CPI data becomes invaluable. It empowers Somali households to make informed financial choices and advocate for equitable wage adjustments.
Conclusion
Reliable statistical data underpins effective governance, facilitating shared understanding and consensus on public policies and developmental initiatives. Through the diligent production of CPI data that meets international standards, the SNBS fosters transparency and accountability in decision-making. By ensuring public access to this data, trust is built between citizens and their government. When policies are supported by credible evidence, confidence in governance flourishes—a crucial factor for a nation in recovery.
While the inauguration of the CPI system is a monumental achievement, it’s merely the first step toward a statistical renaissance in Somalia. The SNBS aims to maintain this momentum through a series of strategic initiatives. Regular monthly releases of CPI data will ensure timely access to economic insights. Plans to disaggregate data between urban and rural communities recognize the disparate inflationary pressures they face.
In addition, the groundwork is being laid for a Producer Price Index (PPI), which will monitor inflation at the wholesale and production levels, further enriching our understanding of economic trends. SNBS is committed to strengthening its institutional framework through staff training, infrastructure development, and enhanced collaboration across governmental bodies. Public engagement will also be prioritized, with campaigns designed to elevate statistical literacy and equip citizens with the tools to understand how data influences their lives.
As we look ahead, SNBS is exploring cutting-edge data collection methodologies, including electronic price monitoring and web scraping. These innovations signal an eagerness to modernize Somalia’s data systems in alignment with global standards, fostering a statistical environment that empowers both policymakers and the populace.
Abdisalam Abdirahman Mohamed holds a PhD in Economics from the University of Glasgow and is the Director General of the Somalia National Bureau of Statistics.
Edited By Ali Musa Axadle Times international–Monitoring.
