Main Article Content
Abstract
The study investigates the impact of insecurity, exchange rate, and energy prices on inflation rate in Nigeria. To document this study, time series data were used from 1985 to 2022. Major variables used include insecurity, which was proxied by security expenditure, exchange rate, premium motor spirit prices, crude oil prices, and inflation. Descriptive and inferential statistics was employed specifically the autoregressive distributive lag (ARDL) model. Findings revealed that LCRPR, LPMS and LINSEC are stationary at first difference whereas LINFL and LEXCH achieved stationarity at levels and a long run relationship exists among the series. However, in the short run, insecurity and premium motor spirit have a positive relationship to inflation whereas exchange rate is on the contrary. Also, crude oil prices and premium motor spirit possesses an inverse relationship while exchange rate and insecurity are on the contrary in the long run. The study further reveals that insecurity, exchange rate and premium motor spirit has a unidirectional relationship to inflation. Consequently, the study concluded that all the variables insecurity, exchange rate, crude oil prices and premium motor spirit have significant impact with varying magnitude on inflation under the period considered. Therefore, the study suggested that government should aggressively diversify her economy towards the non-oil sector with emphasis on the critical sectors and also a Marshallian action plan need to be instituted by all stakeholders within the value chain on how to bring the insecurity condition to its knees as this will revive and spur economic activities.