International Journal of Humanities and Social Science

ISSN 2220-8488 (Print), 2221-0989 (Online) 10.30845/ijhss

Determinants of Inflation in Nigeria: An Empirical Analysis
Fatukasi Bayo

Abstract
This study investigates the determinants of inflation in Nigeria between 1981 and 2003. The Nigerian economy had faced with inflationary trends over the years and the various government policies to deal with it eluded long-term solution needed to bring about increased living standard of the Nigerian citizenry. Hence, the need for an investigation into the multi-dimensional and dynamic factors that affect inflation with the view to make appropriate recommendations to curbing it. From the study, it was revealed that all explanatory variables (fiscal deficits, money supply, interest and exchange rates) significantly and positively impacted on the rate of inflation in Nigeria during the period under review. The explanatory variables accounted for 72% of the variation in inflation during the period with the error terms capturing 28% of the variation. This research contributes to the idea that the causes of inflation in Nigeria are multi-dimensional and dynamic, requiring full knowledge at any point in time to be able to proffer solutions to the inflationary trends in the country to lead to high productivity and increased living standard of the citizenry.

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