Published : 2020-09-29

Premium Motor Spirit (PMS) pricing and inflationary dynamics in Nigeria

Olawale Isaac Wale-Awe



Luqman Adedamola Sulaiman



Section: Articles

Abstract

The study examines the effect of PMS pricing on inflationary dynamics in Nigeria between 1980 and 2018. Inflation was used as the dependent variable for the study, while the prices of PMS (Premium Motor Spirit, simply called petrol), AGO (Automotive Gas Oil, simply called diesel), and DPK (Dual Purpose Kerosene, simply called kerosene), as well as the exchange rate, were used as independent variables. The study employed the ARDL and causality techniques for analysis. It was discovered in the study that the price of PMS increases inflationary tendencies in the country. Meanwhile, the causality test revealed the absence of causality between PMS pricing and inflationary dynamics in Nigeria. Thus, the study recommended that the government should stabilise the price of PMS and align it with the wage rate.

Keywords

PMS pricing ; crude oil price ; inflation ; Monetary Authorities


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