An appraisal of trade liberalization’s influence on consumer price stability in Nigeria: A study of the CBN (2000–2020)
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Background of the Study :
Trade liberalization involves reducing trade barriers—such as tariffs, quotas, and non‐tariff barriers—to foster open markets and improve economic efficiency. In Nigeria, the Central Bank of Nigeria (CBN) has played a pivotal role in implementing liberalization measures over the period 2000–2020. These measures aim to stabilize the domestic currency, promote competition, and ultimately impact consumer price levels. By allowing for greater import penetration and increased competition, trade liberalization is expected to contribute to price stabilization through downward pressure on costs (Okonkwo, 2023). However, the relationship is complex: while increased competition may lower prices, volatility in global markets and exchange rate fluctuations may cause intermittent inflationary pressures (Adeniyi, 2024). Empirical evidence indicates that liberalization can lead to enhanced efficiency in resource allocation, yet its effects on consumer price stability depend on complementary policies and market conditions (Chukwu, 2025). This study examines how trade liberalization has influenced consumer price stability in Nigeria by analyzing historical price indices, exchange rate movements, and policy interventions. The research integrates quantitative data with policy analysis to determine whether liberalization has achieved its intended stabilization objectives, while identifying the key factors that mediate its impact on consumer prices.
Statement of the Problem
Despite progressive trade liberalization policies, Nigeria has experienced periods of consumer price instability. Fluctuations in global commodity prices and currency volatility have sometimes offset the benefits of open trade, resulting in inflationary pressures that hurt consumers. The CBN’s interventions have not consistently delivered stable price environments, indicating a disconnect between liberalization efforts and market outcomes. This study seeks to identify the determinants that undermine consumer price stability despite liberalization policies and to assess the overall effectiveness of these measures. Addressing this gap is essential for ensuring that trade policies contribute to sustainable economic stability (Okonkwo, 2023; Adeniyi, 2024).
Objectives of the Study:
1. To evaluate the impact of trade liberalization on consumer price stability in Nigeria.
2. To identify factors that mediate the relationship between liberalization and price levels.
3. To propose policy recommendations for enhancing price stability.
Research Questions:
1. How has trade liberalization affected consumer price levels in Nigeria?
2. What factors contribute to price volatility post‐liberalization?
3. How can policy adjustments improve consumer price stability?
Research Hypotheses:
1. H1: Trade liberalization significantly reduces consumer prices.
2. H2: External market shocks moderate the effect of liberalization on prices.
3. H3: Complementary policies enhance the stabilizing effects of liberalization.
Significance of the Study (100 words):
This study offers critical insights into the effectiveness of trade liberalization in stabilizing consumer prices. Its findings will aid the CBN and policymakers in designing balanced trade and fiscal strategies that mitigate inflationary pressures while harnessing the benefits of open markets, thereby promoting sustainable economic stability (Chukwu, 2025).
Scope and Limitations of the Study:
The study is limited to analyzing CBN-led trade liberalization policies and their effects on consumer price stability in Nigeria using historical price and exchange rate data.
Definitions of Terms:
1. Trade Liberalization: The reduction of trade barriers to allow for free market exchange.
2. Consumer Price Stability: The condition where consumer prices remain relatively constant over time.
3. CBN: The Central Bank of Nigeria.
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