Time series modelling of inflation and consumer price index trends in Nigeria

Authors

  • Benson Ade Eniola Afere
    Department of Mathematical Sciences, Prince Abubakar Audu University, Anyigba 272102, Nigeria
  • Yahaya Baba Usman
    Department of Mathematics and Statistics, Federal Polytechnic, Idah, Kogi State, Nigeria
  • Ekele Alih
    Biostatistics Unit, Department of Mathematical Sciences, Federal University, Oye-Ekiti, Nigeria
  • Ekele Vincent Aguda
    Department of Mathematics, Nigeria Maritime University, Okerenkoko, Nigeria
  • Latifat Enesi
    Department of Mathematical Sciences, Prince Abubakar Audu University, Anyigba 272102, Nigeria

Keywords:

Inflation, ARIMA models, GARCH models, Cointegration, Monetary policy transmission

Abstract

Inflation is a long-term, steady rise in the average price of goods and services. Its volatility weakens purchasing power, distorts income distribution, discourages investment and savings, and threatens macroeconomic stability. This study examined the relationship between the Consumer Price Index (CPI) and Financial Institutions’ Credit Deposit (FICD) ratio using regression, ARIMA, and GARCH models to forecast inflation. Data from the National Bureau of Statistics (2015-2024) and Central Bank of Nigeria were analyzed. Descriptive results showed high variability in inflation (mean = 1.29%, SD = 0.59, skewness = 1.05) and moderate variability in FICD (mean = 8.69, SD = 2.62, skewness = 0.36). Regression results indicated a negative but insignificant effect of FICD on inflation (β = −0.0177, p = 0.3977). The Augmented Dickey-Fuller test confirmed stationarity (p = 0.01). ARIMA(2,2,1) captured inflation persistence, while GARCH(2,3) identified mild volatility. Johansen cointegration tests revealed no long-run equilibrium among CPI, inflation, and FICD. Findings suggest that structural and cost-push factors drive inflation, requiring stronger monetary transmission and efficient credit allocation for price stability.

Dimensions

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ARIMA inflation forecasts of 24 months.

Published

2025-12-26

How to Cite

Time series modelling of inflation and consumer price index trends in Nigeria. (2025). Recent Advances in Natural Sciences, 3(2), 225. https://doi.org/10.61298/rans.2025.3.2.225

Issue

Volume 3, Issue 2, December 2025 (In Progress)

Section

Articles
Copyright & Licensing

Copyright (c) 2025 Benson Ade Eniola Afere, Yahaya Baba Usman, Ekele Alih, Ekele Vincent Aguda, Latifat Enesi

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

How to Cite

Time series modelling of inflation and consumer price index trends in Nigeria. (2025). Recent Advances in Natural Sciences, 3(2), 225. https://doi.org/10.61298/rans.2025.3.2.225