This study examines the impact of inflation on poverty levels in Nigeria over the period 1986–2025, employing a multidimensional econometric framework that incorporates an extensive set of structural, institutional, and macroeconomic control variables. Specifically, the study controls for fixed capital formation, foreign direct investment (FDI) inflows, infrastructure index, exchange rate volatility, trade openness, technology adoption, government expenditure, institutional quality, control of corruption, political stability index, ease of doing business score, sectoral composition, natural resource rents, financial development, labour force participation rate and unemployment rate, research and development (R&D) expenditure, and internet penetration. Drawing on secondary data sourced from the World Bank, International Monetary Fund (IMF), National Bureau of Statistics (NBS), and Central Bank of Nigeria (CBN), the study applies the Autoregressive Distributed Lag (ARDL) bounds testing approach, alongside the Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) as robustness checks, after establishing mixed-order integration among the variables. The findings reveal that inflation exerts a statistically significant and economically meaningful positive effect on poverty incidence in Nigeria, both in the short run and long run. Institutional weaknesses, exchange rate instability, and low financial development amplify the poverty-worsening effects of inflation, while trade openness, FDI inflows, government expenditure, and internet penetration exhibit significant poverty-mitigating effects. These results underscore the urgent need for a comprehensive policy framework that anchors inflation expectations, strengthens institutional capacity, expands financial inclusion, and harnesses digital infrastructure to break the inflation-poverty trap in Nigeria.
Onipe Adabenege Yahaya (2026) studied this question.