Household Consumption Under Inflationary Pressures: Insights from Emerging Markets

Abstract

This paper explores how rising price levels influence patterns of household expenditure in emerging economies. Utilizing a panel dataset covering ten nations from 2000 to 2022, the study applies econometric techniques—including fixed-effects and random-effects estimations—to evaluate the effect of inflationary movements on consumer spending behaviour. The findings demonstrate a clear inverse association between inflation and household outlays, showing that persistent increases in prices diminish real income capacity and limit demand for goods and services. These results carry important implications for economic governance, particularly in the formulation of monetary strategies and fiscal policies aimed at protecting household welfare in inflation-sensitive markets.