Welfare Loss and Surge in Food Commodity Prices in Nigeria

Abstract

This study endogenously determines the extent of welfare loss during and after the recent economic recession in Nigeria by adopting the technique of Least Squares with Breakpoints (BREAKLS) covering 30 monthly (January, 2016 to June, 2018) data on the selected food commodity prices and CPI.  Through the use of Bai-Perron tests as break type, the study revealed that the period of recession erodes the peoples’ purchasing power and hence worsens their welfare as an increase in consumers price index is influenced by greater increase in the prices of selected food commodity. Also, peoples’ welfare begins to improve as the economy begins to recover as a result of gradual fall in the prices of selected food commodity.

Keywords: Inflation, Economic recession, food commodity, price, welfare.