BACKGROUND OF THE STUDY
In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. The measure of inflation is the inflation rate, the annualized percentage change in a general price index, usually the consumer price index, over time. The opposite of inflation is deflation. Inflation affects economies in various positive and negative ways. The negative effects of inflation include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, and if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future. Positive effects include reducing unemployment due to nominal wage rigidity allowing the central bank more leeway in carrying out monetary policy, encouraging loans and investment instead of money hoarding, and avoiding the inefficiencies associated with deflation. Economists generally believe that the high rates of inflation and hyperinflation are caused by an excessive growth .A more exact definition of inflation is a situation of a sustained increase in the general price level in an economy. Inflation means an increase in the cost of living as the price of goods and services rise. Inflation leads to a decline in the value of money. “Inflation means that your money won’t buy as much today as you could yesterday.” The inflation rate is the annual percentage change in the price level. (1980-2017)
1.2 STATEMENT OF THE PROBLEM
The Effect of inflation slower increases in agricultural producers prices than for inputs. This resulted in declining profitability and purchasing power parity of agricultural products, increasing debts and risk, and the weakening of agriculture's competitive position on international markets. Input price inflation creates cash flow problems for farmers and increases the necessity of a high level of operational management and conservative financial strategies. Individual farmers can possibly counteract the effect of input price inflation through increases in productivity and economizing on costs. Present competitive structures may however possibly result in accelerated input price inflation if increases in productivity and economizing on costs occur for agriculture in aggregate. Solutions will be dictated by general economic policy. More effective competition and the enlargement of effective demand through accelerated urbanization have, at least theoretically, potential possibilities. The problem confronting the study is to appraise the impact of inflation on agricultural product output in Nigeria (1980-2017)
1.3 OBJECTIVE OF THE STUDY
The Main Objective of the study is to appraise the impact of inflation on agricultural product output in Nigeria (1980-2017); The specific objectives include
1 To determine the level of agricultural product output in Nigeria.
2 To determine the level of inflation in Nigeria.
3 To determine the impact of inflation on agricultural product output in Nigeria (1980-2017)
1.4 RESEARCH QUESTIONS
1 What is the level of agricultural product output in Nigeria?
2 What is the level of inflation in Nigeria?
3 What is the impact of inflation on agricultural product output in Nigeria (1980-2017)?
1.5 STATEMENT OF THE HYPOTHESIS
The statement of the hypothesis for the study is stated in Null as follows
HO The level of agricultural output in Nigeria is low.
Ho The impact of inflation on agricultural product output in Nigeria between 1980-2017 is high.
1.6 SIGNIFICANCE OF THE STUDY
The study addresses the impact of inflation on agricultural product output in Nigeria between 1980-2017. It provides relevant data for the effective formulation and implementation of policies which will further stimulate the economy to economic growth and development.
1.8 LIMITATION OF THE STUIDY
The study was confronted with logistics and geographical factors
1.9 DEFINITION OF TERMS
Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money. It is a loss of real value in the medium of exchange and unit of account within the economy.
MONETARY POLICY DEFINED
Monetary policy is the process of controlling the supply, availability, cost of money or rate of interest. Monetary policy is usually used to attain a set of objectives oriented towards the growth and stability of the economy
EMPLOYMENT RATE DEFINED
This is the percentage of the labor force that is employed and also constitute one of the economic indicators that economists examine to help understand the state of the economy.
UNEMPLOYMENT RATE DEFINED
This constitutes the number of people actively looking for a job as a percentage of the labour force. The unemployment rate is defined as the percentage of unemployed workers in the total labor force. Workers are considered unemployed if they currently do not work, despite the fact that they are able and willing to do so.