Exchange Rate Volatility and Inflation Pass-Through: An Assessment of Imported Inflation in Nigeria

The study examines the extent to which exchange rate volatility contributes to inflation pass-through in Nigeria, with particular emphasis on imported inflation dynamics, using data spanning 2000 to 2025 and an Autoregressive Distributed lagged (ARDL) model for the estimation. The results suggest that there exists a long-run relationship among the variables. Exchange rate volatility and money supply were found to increase imported inflation, while the level real effective exchange rate exerts a negative effect on inflation. The study therefore stresses that is exchange rates pass-through to imported inflation in Nigeria, suggesting that the Nigerian economy is highly sensitive to currency fluctuations. The paper, therefore, stresses the need for a coordinated exchange rate management and improvement in monetary and fiscal policies measures to achieve sustainable price stability through market deepening and strategic intervention of government.