Forecasting the Inflation Rate in Nigeria: Box Jenkins Approach

Abstract

This paper aims to forecast the inflation rate in Nigeria using Jenkins approach. The data used for this paper was yearly data collected for a period of 1961-2010. Differencing method were used to obtain stationary process. The empirical study reveals that the most adequate model for the inflation rate is ARIMA (1,1,1). The model developed was used to forecast the year 2011 inflation rate as 16.27%. Based on this result, we recommend effective fiscal policies aimed at monitoring Nigeria’s inflationary trend to avoid the consequences in the economy.