ABSTRACT

The study examined the impact of inflation rate on household consumption expenditure in Nigeria from 1981 to 2017. The broad objective of this study is to determine the impact of inflation. Annual data on inflation rate, interest rate and gross domestic productfrom the Central Bank ofNigeria statistical bulletin covering the period 1981 — 2017 were utilized. A model was constructed to incorporate manufacturing sector output as dependent variable, and commercial banks total loan volume, inflation rate and interest rate as the independent variables and tested using the Ordinary least Square (OLS) Methods. Three null hypothesis were formulated which sought to the impact ofinflation rate on household consumption expenditure on in Nigeria. They were accepted at 5 percent significant level based on the results ofthe study. Interest rate is negatively related to household consumption in Nigeria and was seen to have an insignificant effect. Therefore to discourage this negative contribution, the government should adopt an interest rate favourable to the economy. The results shows that from the result ofthe analysis it was established that inflation had no significant and negative impact on household expenditure in Nigeria, It was alsofound that interest rate had no significant impact andpositive impact on household expenditure in Nigeria. It was also recommended that government should make better use ofdirect controls and effective capital movement adjustment and the government should control and manage inflationary pressure efficiently