THE STATISTICAL ANALYSIS ON INFLATIONARY TREND IN NIGERIA.

CHAPTER ONE

INTRODUCTION

Introduction In this contemporary society one major target of a macro economic polices is how to achieve stability in price level. stability here does not mean a situation where price will remain fixed, it means a situation where variation in price over a long period is minimal Price stability refers to relative stability in price over a given period of time because for some reasons prices rise and fall periodically. Sellers in the commodity market labour market and capital market kept increasing there prices for some economic and other reasons, in the commodity market producer or sellers complain of increasing cost, employees in the labour market form union and fight for increased wages to enable them meet up with the high cost of living and depreciation in the purchasing power of money, while suppliers of land and capital increase there rents and interest with excuse of rising cost of funds. One ultimate effect is that prices continue to go up from time, if this increase in prices where gradual may be one or two percent per year, people can easily adjust without much complaint. But when prices are rising generally at very fast rate people become very worried and that is when the effect of rising prices becomes of significance to the economy and however lead to a situation known as inflation in view of their devastating effect of inflation in Nigerian economy, this project work will in chapters that follows carry one a “statistical analysis on inflationary trend in Nigeria from the period of 2001 to 2010

1.2 BACKGROUND OF STUDY

According to oxford advance learners dictionary inflation is a general rise in the prices of goods and services in a particular country resulting in a fall in the value of money Webster new English collage dictionary defines inflation as “an increase in volume of money and credit relative to available goods and services resulting to substantial and continuing rise in general price levels. Solow (1979) sees inflation as going on when one needs more and more money to buy some representative bundle of goods and services or a sustained fall in purchasing power of money steady persistent rise in prices caused by too much money chasing too few goods. It is a state of conflict and disequilibrium in which a given community is struggling to acquire more goods and services that are available.