Volume : 2, Issue : 2, JUN 2018
CURRENCY DENOMINATION AND MARKET PRICING OF COMMODITIES IN MAKURDI LOCAL GOVERNMENT AREA OF BENUE STATE, NIGERIA: A MONTE CARLO EXPERIMENT
David Atama, Okpe, Isa .J.
This study investigated the impact of currency denominations on market pricing of commodities in Makurdi Local Government Area of Benue State. To achieve this objective, the study compiled prices of 2,002 low-priced consumer goods ranging from food products and beverages; cosmetic, soap, detergent; water, drinks and dairy products among others from 116 distinct retail stores. Two datasets namely: the actual retail price (which represents the observed market price of a particular commodity) and the expected retail price (a surrogate price) were considered. Data gathered were analyzed using the Monte Carlo Simulation. The study found that the absence of coins denomination in circulation has made retailers to round up prices of items in the categories of food products and beverages; cosmetic, soap and detergent, water, drinks and dairy products. However, the impact of coins denomination on commodities such as razor blade, paper, and other stationery was negative as retailers strategically rounded down their prices. In general, the study found a significant relationship between price movement and the lowest denomination of N5 in Makurdi LGA. The study, therefore, recommended the need to redenominate the naira so as to facilitate easy adoption of the coins denominations as well as give them more value and hence, encourage their use.