CURRENCY DEPRECIATION, INFLATION, AND HOUSEHOLD CONSUMPTION IN NIGERIA
Abstract
The relationship between currency depreciation, inflation, and household consumption has remained a subject of policy concern and scholarly interest, given its implications for household welfare and economic stability. This study investigated the effects of exchange rate depreciation and inflation on household consumption in Nigeria from 2000 – 2023. Mixed design was employed. Secondary data: annual time series were sourced from World Development Indicators (WDI) and Central Bank of Nigeria (CBN) statistical bulletin were collected. Data were analysed using EViews, employing Vector Autoregressive (VAR) model, Impulse response functions and Granger Causality as parameters. Household consumption was strongly persistent, with the first lag of significantly positive (coefficient = 0.724, p0.1). Inflation exerted negative but insignificant short-run effect on household consumption (coefficient = –0.033, p>0.1). Exchange rate depreciation showed weak and insignificant impact (coefficient = –0.000066, p>0.1). Interest rate had positive and significant effect in the second lag (coefficient = 0.00447, p
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