Monetary Policy Rate and Food Inflation in Nigeria

Nwachukwu Edwin Udochukwu, Orji Alexander Chinedu, Edeh B. Ogah and Ukeje Chiemezie Desmond
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Nwachukwu Edwin Udochukwu: Nnamdi Azikiwe University, Awka, Nigeria
Orji Alexander Chinedu: Nnamdi Azikiwe University, Awka, Nigeria
Edeh B. Ogah: Nnamdi Azikiwe University, Awka, Nigeria
Ukeje Chiemezie Desmond: Nnamdi Azikiwe University, Awka, Nigeria

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 8, 4494-4506

Abstract: Food inflation poses a significant and multifaceted challenges in Nigeria, with widespread and severe implications for the population. In response, this study examines the influence of the monetary policy rate on food inflation, considering the numerous policy changes from 1990 to 2023. Food inflation serves as the dependent variable, while the independent variables include the monetary policy rate, broad money supply, exchange rate, treasury bills, and agricultural productivity. Utilizing the Autoregressive Distributed Lag (ARDL) technique, the short-run analysis reveals that the monetary policy rate has a significant negative impact on food inflation. In contrast, the exchange rate and broad money supply exhibit a positive but insignificant impact, whereas treasury bills have a significant positive impact on food inflation. In the long run, the ARDL results show that both the monetary policy rate and broad money supply have a negative but insignificant impact, while agricultural productivity exerts a significant negative influence on food inflation. Conversely, the exchange rate has a significant positive impact, and treasury bills, though positive, remain insignificant in their effect on long-run food inflation.

Date: 2024
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