1.0 Introduction
Nigeria economy has suffered so much since the attainment of independence in 1960. The causes of this suffering could be chiefly attributed to price fluctuation (Inflation) and therefore it is necessary that this vice is defined, exposed and controlled for economic and social progress of the masses.
Inflation can be defined as a continuous rise in price in goods and services caused by too much money in circulation. Any economy that tries to grow rapidly than the required rate of growth is likely to suffer inflation which could be classified in terms of types depending on the degree and intensity of the price increment.
The existence of this financial vice called inflation is attributed to a number of factors and they include;
High cost of production, poor storage facilities increase in wages and salaries with a corresponding increase in the supply of goods and services, low domestic productivity in the industrial and agricultural sector, excessive financing and rapidly increasing in agricultural expenditure.
The consequences of inflation could be grouped in to two (2) bad and good effects. This is probably why some economy recommends mild inflation while others abhor it entirely. But for the sake of this project, inflation will be related as a cankerworm, which weakens the economic activities of an economy.
It is therefore, necessary to put off inflation permanently from our economy since it can cause a lot of harm to the economy with the result of discouraging investors from investing. So, it is worthwhile to put in place some measures like monetary policy, fiscal policy and physical checks to control inflation in our economy.
1.1 Background of the Study
The term inflation could be defined as a process of steady and persistent rising in prices of goods and services due to the volume of money in circulation.
Nigeria has experienced high volatility in inflation rates since early 1970's there has been some period of high inflation in excess of 30 percent, this is because money growth has often in excess of real economic growth. in the years preceding 1975 The rates were below 30 percent. Nine years later in 1984 due to pressure from debtor groups to reach an agreement with the international monetary fund (IMF) one of the conditions was devaluation of domestic currency.
The expectation that devaluation was imminent fuelled inflation as prices of adjusted to the parallel rate peaked at 39.6 percent but in the year 1997 and 1998 inflationary trend started a downward trend and stood at about 10 percent. However, one major target of micro-economic policies now is how to achieve stability in price level, stability here does not mean a situation where price will remain fixed, but it means a situation where variation in prices will lost over a long period of time so that people can easily adjust with the price without much complaints.
1.2 Statement of the Problem
In this research work we focused on the prevalent problems that inflation has been causing in our economy.
These problems are as follows;
Inflation reduces the standard of living of the people whose income is fixed thereby increasing their cost of education, welfare and cultural facilities available. This situation however, makes it difficult for the poor masses with the fixed income to survive in the economy.
Inflation leads to a fall in the burden of national debt by making a fixed debt amount to lose its purchasing power.
Inflation also leads to a balance of payment deficit when the price of domestic goods rise and make more consumer goods to be imported thereby making the country to spend more foreign currency than what it will receive from exportation. However, since the real value of money fall during inflationary period, people prefer to spend it rather than investment.
1.3 Objectives of the Study
The study embraces the causes, consequences and control of inflation in the Nigeria economy. The negative effect has indeed remained stagnant towards the economic development. However, the main objectives of this study are as follows:
- To know its influence in the Nigeria economy.
- To determine how inflation affect our economy.
- To find out the means and provides solution that can be adopted in solving the problem of inflation in Nigeria economy.
The study will also educate the masses on the need to minimize the problem associated with inflation on a bid to have an economic boom instead of boom.
To give suggestions on how to curb inflation through government agencies and individuals.
1.4 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- What are the problems that inflation has been causing in our economy?
- Can inflation reduce the standard of living of the people whose income is fixed, thereby, increasing their cost of education, welfare and cultural facilities?
- Does inflation head to a fall in the burden of national debt by making a fixed debt amount to lose its purchasing power?
- How can inflation lead to a balance of payment deficit when the price of domestic gods rise and make more consumer goods to be imported thereby, make the country to spend more foreign currency than what it will receive from exportation?
- How can the real value of money fall during inflationary period, people prefer to spend it rather than investment?
1.5 Significance of the Study
The significance of this study is to achieve a great success as we can in solving the problems of inflation in our economy.
The significance of this study will also be of immense importance to the following groups:
- To other researchers
- To central bank of Nigeria
- To the government and the public at large.
To other researchers, they will use it as a guide and base from consultation of their research work. Its significance to the central bank of Nigeria is that it will help them in strengthen the inflationary trend in the country.
This study will also enable the citizens to adjust to the demand of economic policies which are geared towards finding a lasting solution to this inflation so as to promote economic policies that favour our nation.
1.6 Scope of Study
The scope of this study will be centered on unilever Nigeria Plc. Enugu.
This research work was face with so many problems which hindered its comprehensive study during the period.
During the course of this research, a lot of factors militated against the effectiveness of the research work.
1.7 Limitation of the Study
In this research work, numerous problems were encountered which limit the work to this extent of survey. During the course of this research, a lot of factors militated against the effectiveness of the problems include;
Financial Constraint:
As students, there was not enough capital to spend in transport and fact finding and borrowing of necessary literature that would have helped in the writing of this research work.
Time Factor:
It was difficult for the researcher to complete the study within the record time because of the pressures of other academic works.
Inadequate of Statistical Data:
The statistical data were cumbersome to lay hands on due to the fact that there were inadequate of some sellers to communicate well with their customers.
1.8 Definition of Terms
Inflation:
Inflation can be defined as the persistent rise in the price of goods and services due to the volume of money in circulation.
CBN:
It means Central Bank of Nigeria. This is a financial institution set up by the control government of Nigeria to carry its financial business activities of printing of currencies and minting of coins, raising loan, influencing the money supply, controlling the activities of other financial institution.
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