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Title: International Oil Price and Inflationary Pressure in Nigeria
Author(s): EWUBARE Dennis B. & JACK Better
Abstract: This study empirically examined the nexus between international oil price and inflation in Nigeria. The study used monthly data from January 2000 to March 2022 sourced from the Central Bank of Nigeria (CBN) and World Bank. The variables considered were Brent crude oil price, official exchange rate, money supply and inflation rate. The econometric method of unit root, cointegration test and autoregressive distributed lag (ARDL) estimation tools was used in analyzing the data. The study found evidence of long run relationship between Brent crude oil price, official exchange rate, money supply and inflation rate. The study found a negative and insignificant relationship between Brent crude oil price and inflation, signaling that changes in general price level are not due to swings in international crude oil price. Empirical evidence reveals that money supply had negative and insignificant impact on inflation in the long run, invalidating the proposition that inflation is a monetary phenomenon. Also, changes in exchange rate are not a source of price increase or decrease in the long run. The study found that inflation expectations are what drives changes in general price level. Based on the findings, the study recommended that the downstream oil sector should be fully deregulated to ensure market efficiency.
Keywords: Oil price, inflationary pressures, exchange rate, money supply and Nigeria
Journal: Economic and Social Science Review (ESR)

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