Exploring the drivers of inflation in Nigeria: the roles of insecurity, oil, food and crop production

What is it about?

In 2023, Nigeria's inflation rate reached 34.19%, the highest in nearly three decades, with food prices soaring by 40.53%. Despite efforts by the Central Bank of Nigeria to control this, including raising interest rates, inflation continued to rise, the currency weakened, and living conditions worsened. This study looks at how factors like insecurity, oil prices, and food production affect inflation in Nigeria, especially after COVID-19. Using data from 1986 to 2023, we found that insecurity and lower crop production drive inflation both in the short and long term. Oil prices have a short-term impact on inflation but help reduce it in the long run. Additionally, increased food production and tighter monetary policy effectively reduce inflation over time. The study suggests that to control inflation in Nigeria, there must be a focus on improving security, stabilizing crop production, and effectively managing oil price fluctuations. These findings can guide policymakers in Nigeria and other developing countries facing similar issues.

Featured Image