The Impact of COVID-19 on Nigeria Consumer Price Index (CPI)

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Date

2021-08-31

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Department of Statistics, Nasarawa State University Keffi.

Abstract

This study models the Nigeria Consumer Price Index (CPI) and forecasts its accuracy with COVID-19 impact on the data. The CPI data is homoscedastic and having heteroscedastic in nature and as such it is modelled using models such as Autoregressive (AR) Autoregressive Conditional Heteroscedastic (ARCH), Generalized Autoregressive Conditional Heteroscedastic (GARCH), Threshold GARCH, ExponentialGARCH and Power ARCH. This study compares these models using available data for Nigeria and found the AR as the model of best fit according to the minimum information criteria. The dynamic forecast evaluation reveals that GARCH-N has the minimum forecast residuals by the Root Mean Square Error (RMSE), Mean Absolute Error (MAE) while AR has the minimum Mean Absolute Percentage Error (MAPE) among the models. On average AR has the minimum forecast residuals. Therefore, employing AR model for modelling and forecasting Nigeria CPI which results in low inflation rate when compared with the results of other models considered. This can improve the economy of the nation.

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model of best fit, AR, minimum forecast residuals, low inflation rate, improve the economy

Citation

[1] Boskin, M. J., Dulberger, E., Gordon, R. J. Griliches, Z. and Jorgenson, D. W. (1998). Consumer Prices, the Consumer Price Index, and the Cost of Living. Journal of Economic Perspectives, 12(1): Winter, 3–26 [2]Reis, R., & Watson, M. W. (2010). Relative goods' prices, pure inflation, and the Phillips correlation. American Economic Journal: Macroeconomics, 2(3), 128-57. [3]Feldstein, M. (2017). Underestimating the real growth of GDP, personal income, and productivity. Journal of Economic Perspectives, 31( 2): 145 – 164 [4] Borio, C. (2020, October). Is Inflation Dead or Hibernating?. In discours à la 24e conférence mondiale sur l’inflation de Barclays (Vol. 5). [5] Mahmood, F., Hashim, S., & Fatima, H. (2021). A Complete Picture of Spatial Disparity in Cost of Living Index: A Case Study of Pakistan’s Cities. Journal of Applied Economics and Business Studies, 5(1), 47-66. [6] Adetiloye, K. A. (2010). Exchange Rates and the Consumer Price Index in Nigeria: A Causality Approach.Journal of Emerging Trends in Economics and Management Sciences (JETEMS) 1 (2): 114-120

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https://keffi.nsuk.edu.ng/handle/20.500.14448/6222

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