Abstract
This study uses the linear and nonlinear ARDL technique developed by Pesaran, Shin, and Smith
(2001) and Shin et al. (2014) to examine symmetry and asymmetry in the impact of oil price shocks
on inflation dynamics in Nigeria over the period 1970 -2019 using four variables: oil price (Oilp),
inflation (INF), money supply (MS) and exchange rate (EXR). The result of the linear relationship
indicates that oil prices have a positive and significant effect on inflation in the short run; while
in the long run, the effect is insignificant. The nonlinear relationship suggests that rising and
falling oil prices have different effects on inflation. While rising oil prices have a positive and
significant effect on inflation in all cases, falling oil prices have a negative and significant effect
on inflation. The result has passed the residuals and stability diagnostics. The dynamic multipliers
indicate that the positive oil price affects inflation more than the negative oil price and that there
is an incomplete pass-through from oil price to inflation in Nigeria during the period of study.