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| Inflationary Trends and Its Determinants in Nigeria
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ONUORAH, A.C. (PhD; F, CIFIAN)
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Abstract:
This study explored inflationary trends and its determinants in Nigeria, for the periods of 1985-2021 (37years). Specifically, the study examined the effect of measures of determinants of inflationary trends; Money Supply (MS), Dollar Exchange Rate (DEXCHR), Government Expenditure (GEXP) and National Debt (NDT) on the Inflation Rate (INFLR) in Nigeria. The study made used of aggregate secondary data for a CBN Statistical Bulletin and analyzed with Autoregressive distributed lag model having established that the model exhibited mixed integration. Meanwhile, the Multicollinearity test and Heteroskedasticity test clearly revealed that the model is free from multicollinearity problem and that it is Homoskedastic signaling that the model is fit for prediction. The results showed that MS passed the test of statistical significance only on the long run. This implies that MS is a strong determinant of INFLR in the long run (P-value= 0.0226) but on the short run ((P-value= 0.5056) is not; DEXCHR exerted positive insignificant effect on INFLR on the short and long run, evident with p-values of 0.3842 and 0.3981 respectively; LogGEXP exerted negative significant effect on INFLR on the short and long run, evident with p-values of 0.0362 and 0.0289 respectively and LogNDT exerted positive insignificant effect on INFLR on the short and long run, evident with p-values of 0.2196 and 0.2060 respectively. Hence, the study concluded that determinants of inflationary trends do not have significant effect on INFLR in Nigeria. The study recommended that the central bank should desist from creating cheap currency so as to curb excess supply of money in the economy.
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