PETROLEUM PRODUCTS PRICE CHANGES, EXCHANGE RATE AND PRICES OF FOOD ITEMS IN NIGERIA

Abstract

The study investigated the link between petroleum products price changes, exchange rate and price of food items in Nigeria using monthly data from January 2010 to December 2021. The study used the Augmented Dickey Fuller (ADF) unit root test procedure in testing the stationarity of the variables and adopted the Autoregressive Distributed Lag Model (ARDL) models in analyzing the data. The ARDL estimated result found evidence that price of PMS and exchange rate has a significant positive impact on prices of food items in Nigeria in the short run and long run periods. The study therefore, recommended that government planned subsidy removal on PMS should be a gradual process instead of a onetime total removal to prevent further hikes in the prices of food items and other commodities in the country. In addition, the local refining of crude oil should be revisited and revamped to boost production and over importations of refined petroleum products for domestic use which will also check exchange rate deprecation.