INFLUENCE OF PERCEPTION OF INFLATION ON SPENDING HABITS IN NIGERIA
Abstract
This study examined how Nigerians perceive inflation and how these perceptions shape their spending habits, with a focus on residents of Umuahia City. Using a descriptive-correlational research design, data were gathered from 384 respondents selected through the Raosoft sample size calculator at a 95% confidence level. A pilot test conducted with 30 participants produced a reliability coefficient of 0.814, confirming the instrument’s internal consistency. The findings showed that respondents’ perceptions of inflation were strongly influenced by prior experiences with rising prices, which made them more cautious and financially restrained. Social interaction also played a major role, as individuals relied on peer discussions, media reports, and online platforms to interpret ongoing price changes. Cognitive interpretations were shaped by personal struggles, with many respondents linking inflation to governance issues and economic policies. In terms of purchase behavior, Nigerians increasingly compared prices, substituted cheaper alternatives for preferred brands, and significantly reduced or postponed non-essential purchases. A statistically significant relationship emerged between inflation perception and purchase behavior, demonstrating that stronger perceptions of inflation led consumers to adopt more cautious and needs-based spending patterns. Respondents also expressed concerns about government interventions, noting issues related to subsidy removal, transparency, and inadequate agricultural support. The study concluded that Nigerians’ spending habits are deeply shaped by their experiences, social information sources, and economic interpretations, resulting in more deliberate and survival-oriented consumption patterns. It recommends that government agencies improve transparency, strengthen communication on economic measures, and expand targeted interventions that stabilize essential goods. Consumer education programs and community-based financial awareness campaigns are also advised to help households make informed spending decisions during inflationary periods.
JEL Classification: E31 – Price Level; Inflation; Deflation; D12 – Consumer Economics: Empirical Analysis; D84 – Expectations and Perceptions; E21 – Consumption, Saving, and Household Behavior
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DOI: http://dx.doi.org/10.46827/ejefr.v9i5.2088
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