Al-Hikmah University Journal

This study examined the relationship between inflation, cost of living, and economic growth in Nigeria from 1991 to 2022 using time series secondary data sourced from the World Development Indicators and Worlddata.com. The study employed the Johansen Cointegration and Vector Error Correction Mechanism (VECM) to analyse the data. The findings revealed a long-run relationship among the variables. Specifically, inflation had a significant positive impact on the cost of living but a significant negative impact on economic growth. Real GDP also had a significant negative influence on the cost of living, while money supply had a positive and significant impact on both inflation and economic growth. The Variance Decomposition showed that most changes in these variables were driven by the variables themselves, except for real GDP, which had about 35% influence on inflation in the long-term. The study recommended that proactive measures should be taken to control inflation. In addition, there should be careful management of the money supply to balance economic activity and inflation. Additionally, the monetary authorities should consider adjusting interest rates to manage inflation effectively