Research Articles
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https://doi.org/10.55640/ijssll-04-08-01
Fuel Subsidy Reform in Nigeria: An Analysis of its Effects on Headline Inflation and Economic Welfare
Abstract
The removal of fuel subsidies has been a persistent and contentious policy issue in Nigeria, frequently debated for its profound economic and social implications. This article examines the multifaceted economic dilemma associated with fuel subsidy removal, with a particular focus on its impact on headline inflation. Drawing upon a comprehensive review of recent literature, this paper synthesizes findings on the direct and indirect effects of petroleum product price adjustments on market prices, economic welfare, and the broader inflationary environment in Nigeria. The analysis incorporates insights from various studies that employ econometric techniques, including unit root tests and cointegration analysis, to ascertain the relationship between subsidy removal and inflationary trends. Furthermore, it addresses the historical context of fuel subsidies, their link to corruption, and the short-term socio-economic consequences. The findings underscore the complex interplay between energy policy, monetary stability, and public welfare, highlighting the critical need for well-managed reforms and mitigating measures to cushion the adverse effects on the populace.
Keywords
Fuel Subsidy Removal, Nigeria, Headline Inflation, Economic Welfare, Petroleum Prices, Macroeconomic Impact, Policy Reform
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