Structural Analysis and Forecast of Nigerian Monthly Inflation Movement between 1996 and 2022.

Abstract

Forecasting leads to adequate and comprehensive planning for sustainable development. A number of procedures are used to estimate, predict and forecast data, but not all are able to capture the historical path of the data generating process adequately. In view of this, the time series characteristics, structural changes and trend of inflation in Nigeria (1996-2022) were analyzed using ARMA, Holt-Winters, spline and other associated models. The results indicated that inflation in Nigeria has remained above acceptable limits in a cyclical trend during the period under study and that there is every possibility that Nigerian inflation would remain above 10% for some time to come. There were six shocks, the major stressors being food inflation, oil and gas prices and wages adjustment. For Nigeria to achieve a stable inflation rate regime of acceptable limits, a robust economic management and intelligence team using a global innovation platform as well as evidenced based policies which ensure that Nigeria does not swerve away from the path to recovery should be established in consultation with the fiscal, monetary, and research authorities.