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This study investigates the relationship between inflation dynamics and retail energy prices across Nigerian states. The paper utilizes LSDV and SYS-GMM techniques for the estimation of the static and dynamic panel models. The research disaggregates energy prices into PMS, AGO, HHK and Gas, with CPI as the dependent variable. State Revenue per capita income, representing demand-pull factor of inflation, is used to capture excess liquidity's impact on inflation. Key findings reveal that PMS, AGO, and HHK have significant and distinct effects on inflation, with PMS and AGO driving the largest increases in CPI. Gas price also contribute to inflation, but its impact is moderated by a substitution effect, where consumers shift to gas in response to rising prices of HHK and other household cooking energy sources. This substitution effect reduces the inflationary pressure from gas, making its overall contribution to CPI less pronounced. Importantly, State Revenue per capita income is positively correlated with inflation, highlighting the role of federal transfers in exacerbating demand-pull inflation. For policymakers, these findings emphasize the importance of targeted interventions to stabilize energy prices, particularly PMS, AGO and federal transfers in shaping local economic dynamics and inflationary pressures. This targeted interventions to stabilize energy prices are vital for mitigating inflationary pressures in Nigerian states, as they account for regional economic differences, ensuring more effective and equitable economic stability across the country.

This study investigates the asymmetric impacts of retail energy prices on inflation in Nigeria, focusing on the period from Q1: 2010 to Q2: 2024. Utilizing secondary data sourced from the Central Bank of Nigeria (CBN) and the National Bureau of Statistics (NBS) e-library, we examine how fluctuations in petroleum prices (PMS and AGO) influence both food and headline inflation. The analysis employs a nonlinear ARDL approach to capture the distinct effects of rising versus falling energy costs, revealing significant asymmetries in their impact on inflation indices. Our findings indicate that increases in fuel prices exert a pronounced inflationary pressure, particularly on food prices, while decreases lead to muted deflationary effects. The results emphasize the need for comprehensive policy interventions to mitigate fuel-driven cost-push inflation. Specifically, we suggest revisiting the framework for fuel subsidy removal to prevent abrupt price shocks that could burden consumers. Additionally, establishing an Energy Price Stabilization Fund (EPSF) could help stabilize food prices during periods of high energy costs by providing targeted support to the food market. Moreover, managing the exchange rate to minimize extreme fluctuations could further alleviate inflation pressures associated with import costs. Finally, strengthening inflation monitoring systems will enhance the government's ability to respond proactively to inflationary trends, ensuring timely interventions. These policy recommendations aim to create a more stable economic environment, reducing the inflationary impact of volatile retail energy prices and improving overall economic resilience in Nigeria.

This paper explores the nonlinear dynamics relationship between petroleum product prices and inflation in Nigeria. By focusing on the role of exchange rate fluctuations in amplifying the relationships, the paper employs a multiplicative interaction approach to address the nonlinear effects of petroleum prices on inflation. Utilizing data from 2016: Q1 to 2024: Q2 from the National Bureau of Statistics and the Central Bank of Nigeria, the study introduces interaction terms to capture how petroleum prices and exchange rates interact to influence inflation. The methodology includes static and dynamic panel estimators, with a focus on the within effect model to account for unobserved state-specific factors. Key findings reveal that AGO and PMS prices significantly drive both headline and food inflation, while DPK's impact varies, and GAS shows minimal effect. The study highlights those geographical factors—proximity to seaports and fuel depots—significantly influence inflationary pressures. States closer to these facilities experience lower inflation due to reduced distribution costs. This suggests that policies aimed at partial subsidization for states farther from key infrastructure could mitigate regional inflation disparities. The findings contribute to the understanding of inflation dynamics, emphasizing the need for targeted policy interventions tailored to regional economic conditions in Nigeria.