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This study investigate the impact of petroleum pump price and interest rate on food prices in Nigeria using an autoregressive distributed lag (ARDL) model covering the period 1984 -2018. The results showed that petroleum pump price and lending interest rate have positive and significant impact on food prices in both the long-run and the short-run whereas imports of goods and services appeared to be negative and significant in explaining changes in food prices in the long-run but is insignificant in the short-run. The exchange rate is insignificant in explaining changes in food prices in both the long-run and the short-run periods. The VECM Granger causality results indicates that there is a long-run causality in the petroleum pump price equation and short-run causality in food prices, petroleum pump price, interest rate, imports and exchange rate equations. The variance decomposition result indicates that variations in food prices and exchange rate are explained by petroleum pump price, imports of goods and services, and official exchange rate. While variations in imports and interest rate are explained by exchange rate and food prices. Therefore, government should re-establish lower legislated PMS pump price and Central Bank of Nigeria should also reduce the interest rate at which it lend money to commercial banks and that will make the commercial banks to lower their lending interest rate all in the process of achieving stability in food prices.

Petroleum Pump Price And Interest Rate On Food Prices In Nigeria: Ardl Approach