Relative price variability of grains and inflation rate movement in Nigeria.

Abstract

The study estimated the functional relationship between relative price variability of grains and inflation rate in Nigeria. The study also estimated price instability indices for major grains and also investigated the impact of government stability and instability on relative price variability of grains in Nigeria. Data were obtained from various publications of Central Bank of Nigeria which covered the period, 1970 to 2007. Ordinary Least Squares method was used to estimate the coefficients of the specified equation. Empirical results reveal that inflation has a positive significant effect on relative price variability of grains. The result further showed that major grain crops in Nigeria have high producer price instability indices. Furthermore, the civilian regimes which were a proxy of government stability brought about a negative significant shift in the coefficient of inflation which implies a reduction in the relative price variability. Hence the civilian regime policies targeted at the grain sub-sector were upheld as these will improve the sub-sector performance.

KEY WORD: Relative price variability, Inflation, Grains, Instability, Fluctuation