1.1 Background Of The Study
The beginning of inflation in Nigeria can be said to be a direct result of the polices of the country's government to stimulate a fast rate of economic growth and development since 1951 when ministerial government was introduced. Inflationary trend since independence shows two distinctive periods in terms of digital analysis. Until 1969 the growth rate of inflation was in one unit with the highest being about 9% in 1966 and even negative growth rate was recorded in 1963, 1967 and 1968. since 1969, the inflationary growth has become two digits, except in 1972, 1973 and of the 1975 recorded 33.7% indicating the effect salary Awards in the fale of inadequate supply of commodities. It was 11.4% in 1980, 21% in 1981, 40.9 in 1989, inflation ha continued recently to as its effects penetrate more deeply into the nation's life. It has become something of a platitude to say sharp, continuous increase in prices are among the most serious economic problems of our time.
One of the fundamental objectives of macro-economic policies in both developed and developing economic is to sustain high economic both together with low level of inflation. This is because a high level inflation disrupts the smooth operation of a market economy Krugman 1998.
At the individual level, inflation exerts a heavy toll on those with bed income. It relatively favours debtors at the expense of creditors. At the firm level, the effect of inflation is called the “menu cost” Rotenberg (1983), Naish (1986), Dmaziger (1988) Valdovinoz (2003) because it affects output when firms have to insure costs as they adjust to the new price level. I.e. (changing their price cost for customers).
In recent times. Inflation was moved from being a wartime phenomena and has established itself firmly on the economic arena of the world and its impact on the key macro economic variable cannot be over emphasized. According to the international monetary fund (IMF). The most complex and serious set of economic problems to carryout national government and international community since the end of world war II consist of virulent and wide spread inflation, a declaration of economic growth and a massive disequilibrium of international payment and according to fried man, one of the most though provoking aspects of inflationary phenomena is that it is found in all societies at every of economic development, under every variety of government and within all kinds political economic and social ideologies.
Generally, inflation can be defined as a continuous and persistent in the general price level of goods and services.
Inflation is frequently described as a state where too much money is chasing too few goods when there is inflation, the currency loose purchasing power. In the definition of inflation, two key words must be born in mind. First is aggregate or forward which implies that the rise in price that constitutes inflation must cover the entire basket in the economy as distinct from an isolated rise in the price of a single commodity or group of commodities.
The implication here is that changing in the individual prices or any combination of this price cannot be considered as the occurrences of inflation.
Inflation generally has an adverse effect on savings which takes the form of accumulated financial assets the willingness of individual and business to hold an increasing quantity of money is influenced to a large event by their aspect regarding future price levels inflation therefore has an adverse effect on saving and is such tends to have a damping effect on the economy.
1.2 Statement Of Problem
Central banks, government and the world over are observed about inflation and therefore devoted a significant amount of resources as disposal to fight inflation. Hence, the primary objective of monetary policy is to ensure price stability the focus on price stability derives from the overwhelming empirical evidence that it is only in the midst of price stability that sustainable growth can be achieved price stability does not cannote constant or unchanging price level but it simply means that the rate of change of the agents do not worry about it.
1.3 Objective Of The Study
The broad objective of this study is to analyze the effects of lion on savings and economic growth the specific objective of the study includes:
- Assessment of the effects of inflation on savings
- Assessment or estimation of the impact of inflation on economic growth.
- To evaluate the importance of savings
1.4 Scope Of The Study
The study will be limited to the period 1991, 2006 and the focus is on the rising profile of inflation in Nigeria and its effects on savings and economic growth.
The study will be based on the use of secondary data and analyzed through both linear and multiple regression techniques. Data will be collected from various books of the federal office of statistics, journal of applied quantitative methods and the central bank of Nigeria.
1.5 Significance Of The Study
This research study should be of immense benefit to individuals, house holds, government, economist, etc. this is because as inflation is being fully treated and analysis in the study, decisions will be carefully taken in carrying out economic plans policies.
1.6 Limitation Of The Study
The problem encountered in this research work is the non. Availability and problem of data collection. There is problem of insufficient information.