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ARIMA MODELLING OF FOOD INFLATION RATE IN NIGERIA
ABSTRACT
This paper fit a time series model to the monthly food inflation rate price in Nigeria from 2014 to 2018 and also provided a year forecast for the likely food inflation rate in Nigeria. The study attempts to outline the practical steps which need to be undertaken to use autoregressive integrated moving average (ARIMA) time series models for forecasting Nigeria’s food inflation rate. Inspecting the ACF and the PACF at the lag, k = 1,2,3…, we discovered that the tentative model is a subset of ARIMA(3,1,3), and the model ARIMA(1,1,2) was preferred base on the AIC &BIC. Then the ACF plot of the residuals shows that the residuals of the model is stationary, and the normal quantile plot indicates that the residuals is normally distributed. Finally, we compared the forecasts for the months of January, February, March, April, June & July to the original values in 2019, and RMSE of 2.999.
Keyword: Food Inflation Rate, ARIMA, Time Series, Forecasting