IMPACT OF PETROLEUM PRICE FLUCTUATIONS ON LOCALLY AND IMPORTED MILLED RICE PRICES IN NIGERIA

The study examined the impact of petroleum price fluctuation on the price of locally and imported milled rice in Nigeria using secondary data. Descriptive statistics, Johansen co integration and error correction model were employed. The result showed an upward trend in crude oil, PMS and AGO prices, alongside consistent increase in the locally and imported milled rice prices over the study period. The Johansen’s co-integration test statistics revealed the existence of long-run relationship among all variables. The analysis revealed that crude oil prices exert an indirect short run effect on rice prices while PMS and AGO have a direct and significant long run impact. A unit increase in petroleum product prices was associated with a proportional rise in rice prices, reflecting cost transmission across production, processing, transportation, and marketing. However, crude oil price effects differed between locally and imported rice, influenced by domestic fuel pricing policies and import dynamics. Thus, the findings highlights Nigeria’s rice market vulnerability to global price shocks and domestic fuel policy changes, with implications for food inflation and food security. To mitigate rice price volatility, policy measure should focus on stabilizing fuel prices through subsidy reforms, investing in local refining and alternative energy, promoting energy-efficient agricultural machinery, enhancing transportation infrastructure, regulating rice import policies, and establishing price stabilization mechanisms. These interventions could reduce inflationary pressures from petroleum price shocks and strengthen national food security.