Price Setting Behavior in Nigeria: Some Stylized Facts
Price Setting Behavior in Nigeria: Some Stylized Facts

Summary/Abstract: This study analyzed the microeconomics of price setting behavior in Nigeria using micro-level retail price data underlying the computation of national indices of consumer prices in Nigeria. This data covers monthly price changes from January, 2011 to December, 2015. Descriptive statistics were used to align theories of price rigidities with data. The results revealed that prices were highly flexible, frequency of price changes is rigid downwards, degree of synchronization is low and the average size of individual price changes is quite small. Generally, the findings are consistent with literature in that state dependent pricing model explains the price setting behavior in the goods sector while time dependent pricing model explain that of service sector. The study advocated for stable macroeconomic environment to reduce the consequences of state dependent price setting in an economy that is prone to exogenous macroeconomic shocks.

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