CONSUMER PRICE INDEX AND INDUSTRIAL PRODUCTION OUTPUT: EMPIRICAL EVIDENCE FROM NIGERIA: 1981-2022

Abstract

This work examined the relationship between consumer price index and industrial production output in Nigeria: 1981-2022. Diversifying the Nigeria’s economy away from mono-product economy has been the target of policies of development to promote non-oil exports, and increase industrial production outputs given the increasing needs of the population. Yet, demand for the products of the industries has been discouraging for the industries given the unstable and frustrating consumer price index. Thus, the government policies and strategies aimed at accelerating industrialization of the nation may not have achieved the desired goals.

The work proposed that consumer price index had impeded industrial production in Nigeria. The data were sourced from World Bank financial indicators website and Central Bank of Nigeria statistical bulletin. The models’ parameters were estimated using ordinary least square method. The empirical results revealed that consumer price index (CPI) had positive significant elationship with manufacturing Sector Output (MSO) in Nigeria; and that consumer price index (CPI) had negative significant relationship with manufacturing Sector Output contribution to Gross Domestic Product (MSOCGDP) in Nigeria. The study concluded that the economic managers of Nigeria had not performed creditably in controlling consumer price index.

The study recommended among others for frugal government spending; Government actions should promote culture of diligence and productivity; the Central Bank of Nigeria should sustain schemes of development finance that should promote value addition to agricultural produces and storage thereby guaranteeing food supply and price stability against vagaries of nature and global shocks that affect food production and security.