Macroeconomic Determinants of Food Price Inflation in Nigeria

The study examined the impact of some macroeconomic variables of food inflation in Nigeria. Exchange rate (ExR), broad money supply (BMS), interest rate (InR), and food production index (FoPI) were employed as dependent variables, while food price inflation was employed as the dependent variable. Data on the variables from the period 1996 to 2023 were sourced from the Central Bank of Nigeria (CBN) Statistical bulletin, and the World Bank, World Development Indicators for Nigeria. The Augmented Dickey-Fuller unit root test was used to test for stationarity of the variables, which revealed that the variables were integrated of order I and order II, which necessitated the adoption of the Autoregressive Distributed Lag (ARDL) bounds test for long run relationship. Result of the bounds test confirmed that the variables have long run relationship. Outcome of the ARDL estimates revealed that an increase in exchange rate resulted to an increase in food price inflation in the country, while an increase in broad money supply, interest rate and food production index all had significant impacts in reducing food price inflation in the country. The study therefore, recommends among others that the Nigerian government through the monetary authorities should avoid devaluation of the currency given that exchange rate worsens food price inflation in the country.