THE STATISTICAL ANALYSIS ON INFLATIONARY TREND IN NIGERIA FROM (2001-2010)

(ABSTRACT)

One major target of Marco-economic polices is how to achieve stability in price level,  stability here does not mean a situation  where price  will remain fixed, but a situation  where  variation in pries  over a long period is minimal since there is no stability in price sellers in labour and capital market  kept increasing, there prices for some economic and other reasons while  the producers and sellers in commodity market also complains of increasing  cost of production or purchasing cost employees in labour market form union and fight for increased  wages to enable  them meet up with high cost of living and depreciation in purchasing power of money. The ultimate  effect is that price continues to  go up from time-to-time, if these increase  in price where  gradual may be one or two percent  per year, people can easily adjust without much complaints but when prices are generally rising at a very fast rate people become very worried and that is when the effect of rising pries  becomes  of more  significance to the economy and lead to a situation known as Inflation, which is a process of steady and persistent rising  pries caused  by too much money chasing too few goods. These however,  posses  great challenges to the citicizens in particular and federal government generally, because it affects those with a fixed income and causes distortion government  development and co-operate plans.

Based on these critical situation been experienced in the country due to inflation. This project work “The statistical analysis   on inflationary Trend in Nigeria from 1999 -2010 is desired  to achieve the following objectives.

1.         To estimate the quarterly trend of inflationary rate in Nigeria from 1999-2010

2.       To investigate if these is any seasonal variation in the inflationary rate in Nigeria.

 

3.       To ascertain whether there is any significance difference in means quarterly inflationary rate from 1999-2010.

4.       To determine factors that are responsible for inflation in Nigeria and proffer  possible solutions to it.

5.       To make necessary recommendation based on influence drawn  from the findings.

Furthermore, the research hypothesis will be to determine whether there is a significant  increase  in the trend  and seasonal variation in the inflationary rate in Nigeria.

The data  will be collected  through secondary source,  like the annual publication of the National Beareu of statistics NBS forming known as  the Federal Office of Statistics, while the statistical tool that will  be sued for analyzing data’s that will be  collected is time series analysis and Analysis of variance (ANOVA)

Finally, this research work will be f great significant to the Federal government in particular and the citizenry in general since it will enable government fight the root causes of inflation by introducing corrective measures though making of well articulated economic polices towards reducing these ugly diseases called inflation in our economy.

TABLE OF CONTENTS

CHAPTER ONE

1.0           INTRODUCTION

1.1            Introduction

1.2            background of the  study

1.3           Statement of problem

1.4            Aims and Objectives of the study

1.5           Significance of the study

1.6           The scope of the study

1.7            The statement of Hypothesis

1.8           Definition of terms

CHAPTER TWO

2.0           REVIEW OF RELATED LITERATURE

2.1            Introduction

2.2           Degree of Inflation and its related causes

2.3           Effect of inflation in the Economy

2.4           Control of Inflation and Reasons for its

ineffective Control

2.5           Attempts made by Government at

controlling Inflation.

CHAPTER THREE

3.0          RESEARCH METHODOLOGY

3.1           Introduction

3.2           Source of Data Collection

3.3          Problems encountered During Study

3.4           Techniques of data analysis

3.4.1         Time Series Analysis

3.4.2        Chi-Square

3.5          Data Presentation

CHAPTER FOUR

4.0           DATA  ANALYSIS

4.1            INTRODUCTION

4.2           Estimation of quarterly trend of inflationary rate

from  2001-2010

4.3           Estimation of quarterly seasonal variation indices

and deseanalised  data  for inflation rate from

2001 to 2010

4.3.1         Estimation of Seasonal variation

4.3.2        Estimation of Seasonal Indices

4.3.3        Computation of deseseaosnalised Data for

inflation rate from 2001-2010

4.4           Predicting the quarterly  inflation rate in Nigeria

4.5           Estimation of quarterly cyclical and irregular

variation of inflation Rate (in present) from

2001-2010

4.6           Determination of dependability or

otherwise of inflation Rate on quarters /period

of the year from (2001-2010)

CHAPTER FIVE

2.0               SUMMARY ,CONCLUSION AND RECOMMENDATION

5.1           Summary of findings

5.2           Conclusion

5.3          Recommendation

References 

CHAPTER ONE

            INTRODUCTION

     Introduction

In this contemporary society one major target of a macro economic polices is how to achieve stability in price level. stability here does not mean a situation where price will remain fixed, it means a situation where variation in price over a long period is minimal

Price stability refers to relative stability in price over a given period of time because for some reasons prices rise and fall periodically. Sellers in the commodity market labour market and capital market kept increasing there prices for some economic and other reasons, in the commodity market producer or sellers complain of increasing cost, employees in the labour market form union and fight for increased wages to enable them meet up with the high cost of living and depreciation in the purchasing power of money, while suppliers of land and capital increase there rents and interest with excuse of rising cost of funds.

One ultimate effect is that prices continue to go up from time, if this increase in prices where gradual may be one or two percent per year, people can easily adjust without much complaint. But when prices are rising generally at very fast rate people become very worried and that is when the effect of rising prices becomes of significance to the economy and however lead to a situation known as inflation in view of their devastating effect of inflation in Nigerian economy, this project work will in chapters that follows carry one a “statistical analysis on inflationary trend in Nigeria from the period of 2001 to 2010

1.2                BACGRUOND OF STUDY

According to oxford advance learners dictionary inflation is a general rise in the prices of goods and services in a particular country resulting in a fall in the value of money  Webster new English collage dictionary defines inflation as “an increase in volume of money and credit relative to available goods and services resulting to substantial and continuing rise in general price levels.

Solow (1979) sees inflation as going on when one needs more and more money to buy some representative bundle of goods and services or a sustained fall in purchasing power of money steady persistent rise in prices caused by too much money chasing too few goods. It is a state of conflict and disequilibrium in which a given community is struggling to acquire more goods and services that are available.

To illustrate the meaning of inflation the more consider the diagram.

 

B

A

From the diagram above it can be observed that N1000 is originally chasing 200 units of goods and services and the price is established at say A on the price line, the supply while goods and services merely increased by four times to 800 units if the community competes for these limited goods and services there will be excess demand over supply at current price A, the result to too much money chasing too few goods it will be that price will steadily rise to B and may continue to rise if left unchecked by the community.

1.3                STATEMENT OF PROBLEM

In recent past there has been alarming increase on the rate of inflation imposing on adverse effect on saving and investment, it has also affected the living standard of Nigerians mostly affected the are the public servants whose incomes are relatively fixed, considering utilization where many industries in Nigeria produce below full capacity because of high cost of raw material, machines, distorting our trade relations with other countries across the border and responsible for constant industrial unrest since with persistent increase in prices, unions like labour and trade union continues to agitate for higher wages

This however poses a great effect on the performance of various sector of our economy and analysts are not left out in this situation of examining the rate of inflation in our economy in the world.

In view of the difficulties created by inflation in Nigeria, the problem of this research work becomes to investigate the trend of quarterly inflationary rate in Nigeria for the periods in view as well as ascertain whether there is seasonal variation in the inflationary rate for those periods and if the yearly inflationary rate depend on some quarters of the year in focus.

Another problem of these research survey is to examine how inflationary rate in this period are affected by unpredicted external factors as well as cyclical fluctuation in the trend of inflationary rate and also examine the root causes of inflation in the country and the control measures taken by government, whether  it has yielded any significant result against this devastating problem of inflation which has eaten deep into our economy

1.4                 AIMS AND OBJECTVES OF THE STUDY

Based on the increasing problems created by inflation in the Nigerians economy which has led to the devaluation of our money where large amount of money is found chasing few goods, leading to loss of confidence in our money.

The statistical analysis on inflationary rate in Nigeria is aimed at achieving the following objectives

(1.)                To ascertain whether there is a quarterly increase in trend of inflationary rate in Nigeria from 2001 – 2010 and make forecast for its future occurrence.

(2.)              To investigate if there is any seasonal variation in the quarterly inflation rate in Nigeria for the period in view.

(3.)              To estimate the cyclical and irregular variation in inflationary rate in Nigeria for the period in view for effective prediction.

(4.)              To determine the undependability or otherwise of inflationary rate in some quarters of the year.

(5.)              Do identify factors that are responsible for the rate of inflation in Nigeria and if there is any positive effect of inflation in our economy

(6.)              To X- ray the corrective measures taken against inflation rate in Nigeria if it has yielded any significant result.

(7.)              Finally to make necessary recommendations based on inference drawn from the findings towards fighting the ugly trend of inflation in our society.

1.5                SIGNIFCAINCE OF THE STUDY

In view of the objectives which this study has set to achieve in the analysis of inflationary rate in Nigeria, it is necessary at this point to reveal the contributions and importance of the study to the federal state and local government and general public at large. Therefore the study will be great significance in the following ways.

(1.)      If the inflationary rate in the economy of Nigeria is found to be on increase it will enable the federal government to fight inflation through introducing contractional monetary and fiscal policies.

(2.)     Secondly the study will enable the federal government to implement policies and programs like price control measure and rationing of available products in those quarters of the year, where there is more influence of inflation, if it is found out that there will be or there is a strong seasonal variation and if also that the yearly inflationary rate depends on some quarters/period of the year from the analysis carried on the period of the years under review.

(3.)    The knowledge of the causes of inflation rate in our economy will go to long way in reducing the problems through applying some corrective measure to stop these causes.

(4.)     Generally the study will assist decision makers in the country to realize the importance of keeping data up to date and the usefulness of statistics and statistician in providing analytical devices in various economic planning and national development.

1.6                THE SCOPE OF THE STUDY

The statistical analysis of inflationary rate in Nigeria economy however covers a wide scope which involves several statistical tools as could be possible, but the researcher has narrowed down the study to cover two statistical tools of time series analysis and chi-square X2 test of independence so as to meet up with the requirement of the study over a period of ten(10) financial year from (2001 – 2010) has been chosen so that the quarters of the years could be properly taken

care of , which makes the series of (4 x 10) = 40 quarters which is a researchable scope.

1.7                 THE SATAEMENT OF HYPOTHESIS

Ho: there is no significant increase in the trend of inflation rate of Nigeria from (2001 -2010)

Hi: there is significant increase in the trend of inflation rate of Nigeria from (2001 -2010)

Ho: there is no significant seasonal variation in inflationary rate of Nigeria from 2001- 2010

Hi: there is significant seasonal variation in inflationary rate of Nigeria from 2001 -2010

Ho: yearly inflationary rate is independent of variation of the quarters of the years from 2001 -2010

Hi: yearly inflationary rate is not independent of the quarters of the year from 2001 – 2010

1.8                DEFINITION OF TERMS

(1.)      Macro- economics: this is a branch of economics that is concerned with aggregate economics activities, issues mostly treated in this includes inflation, national output, employment, price levels income levels and distribution as well as balance of payments.

(2.)    Inflation: this refers to a persistent rise in the general level it is also a state of conflict and disequilibrium in which a given community is struggling to acquire more goods and services than available.

(3.)    Deflation: this refers to a persistent fall in general price level of most goods and services since price fall the value of money rise during deflation.

(4.)    Micro economics: this is the branch of studies in economics concerned primarily with economics behavior of small units.

FISCAL POLICY: This involves the use of taxation and government expenditure policies to influence the economy in order to improve the balance of payment situations.

INFLATIONARY: this is connected with a general rise in the price of services and goods.

BIBILOGRAPHY: this is comprehensive record of all material consulted in carrying out the research it contains the names of the author, the title of the book the edition and town of publication publishers and year of publication.

FREFERNCE: this consists of all document including journal articles, books and unpublished works that are cited in he research report.

RECESSION: this is a difficult time for the economy of a country when there is less trade and more inflation.