ABSTRACT

In the course of this study attempts has been made to effectively capture the effect of inflation on household consumption in Nigeria for the period 1980 to 2016. The study adopted theoretical, empirical and conceptual literature to provide a sound understanding of the phenomenon being studied. Also steps were taken to quantitatively evaluate this relationship using the OLS estimation technique. The variables used were Household consumption expenditure as dependent variable while Income, lending rate and inflation were used as independent variables. The study revealed that inflation has a negative and significant relationship with household consumption expenditure, while income level shows a strong positive and significant relationship with household expenditure in Nigeria. Furthermore, Interest rate is a positive but insignificant determinate of household consumption expenditure and thus it is recommended policies to combat inflation so as to increase the real value of consumer’s income should be targeted, as this would boost household consumption in Nigeria.