Global crises and inflation dynamics in Nigeria

Abstract

This study provided evidence that global crises affected the inflation in Nigeria. Analysing data over the 1999Q1-2022Q4 period within the Test of Means and Variances model, this study finds that the magnitude and volatility of inflation in Nigeria changed with crises. While inflation declined after the global financial crisis (GFC), its volatility rose after the crisis. In contrast, inflation rose after the COVID-19 pandemic while the volatility increased. The decline in inflation after the GFC was associated with increase in real GDP, suggesting its inflation-reducing output effects post-GFC. The absence of any significant increase in real GDP after the COVID-19 shows that the pandemic was trailed by stagflation. These results also show that COVID-19 impacted on inflation dynamics in Nigeria differently from how GFC had.