The Impacts of Oil Price and Exchange Rate on Food Prices in Nigeria

Abstract

This empirical research examined the interconnecting relationship between oil price, exchange rate and food prices in Nigeria. The study applied annual time series data from 1972 to 2016. Autoregressive Distributed Lag (ARDL) techniques were used in the process of estimating the model. The main results disclosed that there is a long run association among the considered variables. The error correction term indicates significant negative sign. Among the two independent variables in the model, exchange rate is affecting food price more than the oil price counterpart since some of the food items are imported. The result has robust implication on policy recommendations in Nigeria. Food production has a vital role in influencing food prices in Nigeria. The Central Bank of Nigeria must consider exchange rate as a factor influencing food price in its quest for achieving inflation target.

Keywords Oil price; exchange rate; food price; ARDL; Nigeria

DOI: 10.7176/JESD/10-8-08

Publication date: April 30^th 2019