Exchange Rate Pass-Through to Import Prices in Nigeria: Evidence from Panel Data Across Import Categories

This study estimates the degree of exchange rate pass-through (ERPT) to import prices in Nigeria across major import categories including capital goods, industrial raw materials, consumer goods, and food imports, providing disaggregated evidence that addresses a gap in the Nigerian international economics literature. Understanding the magnitude and speed of ERPT is critical for monetary policy design, inflation forecasting, and trade policy calibration, yet existing Nigerian studies have typically estimated a single aggregate ERPT coefficient, masking important sectoral heterogeneity. The research employs a panel data design using monthly import unit value indices disaggregated by commodity category, official and parallel market exchange rate series, and import volume data sourced from the Central Bank of Nigeria, National Bureau of Statistics, and the Nigerian Customs Service for the period 2015 to 2023. The panel ARDL approach and the Pooled Mean Group estimator are applied to estimate short-run and long-run ERPT coefficients at the category level, controlling for global commodity price indices and domestic inflation. The theoretical framework draws on the pricing-to-market literature, the new open economy macroeconomics framework, and the ERPT heterogeneity literature. Findings are expected to reveal incomplete but significant pass-through across most import categories, with highest pass-through in food and consumer goods segments and lower pass-through in capital goods where invoicing in dollars and producer pricing strategies dominate. Recommendations are directed at the Central Bank and the Ministry of Finance on designing exchange rate and import tariff policies with category-specific pass-through considerations. Keywords: exchange rate pass-through, import prices, Nigeria, panel data, monetary policy