EFFECTS OF PUMP PRICE OF PETROLEUM INSTABILITY ON CONSUMER PRICE INDEX IN NIGERIA

Abstract

This study examines effect of pump price of petroleum instability on the consumer price index in Nigeria 1980-2020. Objectives are to; ascertain the significant effect of pump price of Petroleum instability on the Nigerian consumer price index, examine the significant effect of pump price of Petroleum instability shock on the Nigerian consumer price index. The study employed the following advanced econometric techniques; Augmented Dickey-Fuller (ADF), Vector Error Correction Estimates approach, Choleski decomposition and Imposing Short-run Restrictions test, statistical tests & Co-integration test. Based on the above econometric techniques conducted, it was observed that all the variables used became stationary at the first differences at degree of order one (I). There is Co-integration (long run relations) among variables used in the study. It was indicated both bidirectional and direct nature of causality relationship between the variables in the model. Furthermore, the results revealed that; Petroleum instability does significantly effect on the Nigerian consumer price index 1980-2020”. Pump price of Petroleum instability does significantly effects shock to the Nigerian consumer price index 1980-2020. The researcher recommends that; Nigeria should have functional local refineries in the country because this will aid the Petroleum availability and as well control prices instable to some extent in Nigeria economy. Nigeria should have the ability to appropriately use the revenue-generated yester-years to develop the infrastructures, which will aid in decreasing the level of inflation. The Nigerian government should create an enabling environment by ensuring security for the growth of our economy.