Inflation and Poverty in Nigeria: A Granger Causality Approach

This study empirically examines the impact of inflation on poverty in Nigeria between the periods 2000- 2018. The empirical results were estimated using the E-views software for the purpose of running Augmented Dickey Fuller test, which confirms the variables to be stationary at level and first difference. In view of the presence of mixed order of integration among the variables as evidenced by the unit root tests, Auto regressive distributed lag was conducted to determine the long run relationship between the series. The result shows that the independent variables have a joint significant relationship with POV with R-Square of 91.4%. It also shows that Inflation during the period under study has a negative but statistical relationship with poverty. The Granger Causality test conducted, shows that there is a uni directional causality flowing from poverty to inflation. the study concludes that the decreasing inflation rate will decrease the poverty level that the country has witnessed with that in check, recommendations were made to the Nigerian government to formulate effective macro-economic policies (fiscal discipline) to monitor and curtail inflation rate at a single digit and cushion the itseffect on the poor.