The Impact of Inflation on Household Consumption: An Econometric Analysis from Emerging Markets

Abstract

This study investigates the relationship between inflation and household consumption in emerging market economies. Using panel data from ten countries between 2000 and 2022, the analysis employs fixed-effects and random-effects models to identify how changes in consumer prices affect household spending patterns. The results indicate a statistically significant negative relationship between inflation and household consumption, suggesting that inflationary pressures reduce real purchasing power and constrain consumer demand. These findings have implications for monetary policy design and fiscal intervention in inflation-prone economies.