Inflation Dynamics and Sectoral Stock Market Performance in Nigeria: Evidence from Listed Firms on the Nigerian Exchange Group (2015–2024)

Ayobami Gabriel Olanrewaju, Ayo David Adeyemi, John Ogwo Madukwe, Timothy Chijioke Ezerioha, Abdulsalam Ayinla Abdulhamid and Chukwudubem Godswill Ezeador
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Ayobami Gabriel Olanrewaju: Department of Finance, School of Business, Western Governors University, United States.
Ayo David Adeyemi: Master of Business Administration (MBA), Faculty of Science, Business and Enterprise, University of Chester, England.
John Ogwo Madukwe: Department of Accounting, College of Management Sciences, Michael Okpara University of Agriculture, Umudike, Nigeria.
Timothy Chijioke Ezerioha: Department of Accounting, Faculty of Management Sciences, Nnamdi Azikiwe University, Nigeria.
Abdulsalam Ayinla Abdulhamid: Department of Accounting, Faculty of Management Sciences, Sa’adu Zungur University, Bauchi, Nigeria.
Chukwudubem Godswill Ezeador: Department of Economics, Faculty of Social Sciences, Nnamdi Azikiwe University, Nigeria.

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Abstract: This study examines the effect of inflation dynamics on sectoral stock market performance in Nigeria, focusing on firms listed on the Nigerian Exchange Group (NGX) from 2015 to 2024. A quantitative panel-data research design was used, covering 72 listed companies, with sector-specific analysis focused on five major sectors, and yielding 720 firm-year observations. Data on inflation, the exchange rate, the interest rate and GDP growth were derived from national statistical and regulatory sources, while firm-level data were obtained from annual reports. The data were analysed using panel regression, including Pooled OLS, Fixed Effects and Random Effects estimation; the Hausman test was used to select the appropriate model. The results revealed that Nigeria's inflation rate increased markedly from 9.01 percent in 2015 to 34.80 percent in 2024. Inflation had a statistically significant negative effect on sectoral stock returns (β = -0.432, p < 0.001), while the preferred model explained 47.2 percent of the variation in returns, with significant variation across sectors. The Consumer Goods and Banking sectors were the most negatively sensitive, while the Oil and Gas sector was relatively resilient, supported by some benefits from deregulation. Returns were positively related to exchange rate depreciation, GDP growth and firm profitability. The study found that inflation is a major and economically relevant factor influencing sectoral performance in Nigeria, with significant variation across sectors. It recommends inflation-targeting monetary policy, better coordination between fiscal and monetary policy, and sector-specific measures to enhance stock market resilience and investor confidence.

Date: 2026-09-02
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Published in Journal of Global Economics, Management and Business Research, 2026, 18 (3), pp.326-338

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05737023

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