Inflation Cost and Operational Success of Small and Medium Scale Enterprises (SMES) In Galadimawa, Abuja

Peter Elaigwu Oteh

Abstract

This study investigates the impact of inflationary costs and operational success of small and medium-sized enterprises (SMEs) in Galadimawa. To achieve the study's objectives, a survey utilizing a simple random sampling (SRS) technique was conducted, with thirty (30) SMEs selected as the sample size. A well-designed questionnaire was employed for data collection. The data were analyzed using descriptive and inferential statistics, including simple percentage indexes, frequency tables, figures, and regression analysis. The findings from the inferential analysis revealed that inflation significantly affects the operational success of SMEs in Galadimawa. Specifically, the analysis showed a strong negative correlation between the Consumer Price Index (CPI) and SME operational success (SP) (β = -0.471, t (25) = -5.629, p < 0.001), with a 95% confidence interval for the unstandardized coefficient ranging from [-0.643, -0.299]. This suggests that a rise in CPI leads to a 47% decline in SME performance, as increased inflation reduces purchasing power, diminishing the customer base of SMEs due to price increases. Furthermore, the analysis of the Producer Price Index (PPI) indicated a significant negative impact on SME operational success (SP) (β = -0.640, t(25) = -7.218, p < 0.001), with a 95% confidence interval between [-0.823, -0.458], showing that a rise in PPI leads to a 64% decrease in SME operational success. The study concludes that inflation, measured through both CPI and PPI, exerts significant downward pressure on the operational success of SMEs in the area.