EFFECT OF DOMESTIC SAVINGS AND INVESTMENT ON CONSUMER PRICE INDEX IN NIGERIA
Keywords:
Consumer Price Index, Gross Domestic Investment, Gross Domestic Savings, NigeriaAbstract
This study assessed the effect of domestic savings and investment on consumer price index in Nigeria. The outcry on poor economic wellbeing in Nigeria seems to be traceable to poor savings and consequent poor investment in the economy. This will further imply that adequate goods and services are not being produced in Nigeria leading to rising prices of the few ones available. The rising consumer price index (CPI) has adversely continued to affect the citizens’ purchasing power and wellbeing. The data for the variables were extracted from World Development Indicators website for the years 1981 - 2020. The methods of data analysis include descriptive statistics, unit root, co-integration and error correction model. The independent variables were gross domestic savings (GDS) and gross domestic investment (GDI) while the consumer price index (CPI) was the dependent variable. The result obtained showed that there was no unit root among the variables as probability values of CPI, GDI and GDS were 0.0117, 0.0071 and 0.0001 respectively. It was found out that gross domestic savings and gross domestic investment have significant effect on consumer price index (both p-values at - 0.0002). It was recommended that government should make adequate provision for state-of-the-art infrastructures in the area of good economic activities-enabled road networks, stable affordable electricity, clean water; sustainable financial inclusion policy that paves room for access to financial services and adequate financial mobilizations to licensed banks. These will help increase output and lead to a healthy and reasonable decrease in prices of goods and services. Moreso, Nigerians need continuous orientation on the need to patronize and consume locally produced goods and services as well as use local content in production.
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