Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/180191 
Year of Publication: 
2017
Series/Report no.: 
ZEF Discussion Papers on Development Policy No. 242
Publisher: 
University of Bonn, Center for Development Research (ZEF), Bonn
Abstract: 
Beside the mixed evidences on transmission of international food price volatility to local markets and the desirability or otherwise of reliance on stabilisation policy to cushion the effects, very little is known about the key drivers of price spikes and volatility in sub-Saharan Africa. This paper is an attempt to bridge this gap, by focusing on the patterns, drivers, and policy responses to food price spikes and volatility across in Nigeria. The study was based on 16 years panel data on average monthly prices (2001:1 - 2016:12) of major food commodities across local markets in the 36 States of Nigeria, supplemented with monthly series of relevant domestic policy variables, and international prices, among other factors. Data analysis was mainly within the framework of fixed effects models. Findings suggest that food price upsurges in an average Nigeria market is more strongly related to spikes than volatility. International factors such as crude oil price, international food prices, and global beginning stock to use of coarse grains, and domestic policy variables such as real exchange rates, monetary policy rates and narrow money are strong influencers of spikes in the price of one or more food commodities in Nigeria's local markets. Higher petrol price and food production variability may substantially advance price instability in local food markets. Government policy actions at addressing volatile food prices immediately after the 2007/2008 food crises appeared to enhance food price stability. These findings call for greater attention on management of monetary policy, including the exchange rates, ensuring stable petrol price, limiting food production instability, mitigating spill-over of price upsurges from international markets and building farmers and consumer's resilience against food price changes, among others, as important pathways to address short and medium-term food price upsurges.
Subjects: 
Price Spikes
Price Volatility
Monetary Policy
Local Food Markets
Nigeria
JEL: 
E31
E52
Document Type: 
Working Paper

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