Inflation Rate Volatility and Household Final Consumption Expenditure: Evidence from Cameroon

Abstract

Aims: The study aims to examine the effects of inflation rate volatility on household final consumption expenditure in Cameroon. Studies on inflation rate and household final consumption expenditure in Cameroon are limited. This study provides a new insight into how inflation rate fluctuations affect household consumption expenditure in Cameroon. Study Design: The study made use of an ex-post facto research design as the researcher has no control over the variables. Place and Duration of the Study: The study was conducted in Cameroon using World Bank data from 1980-2020. Methodology of the Study: The objectives of the study were accomplished using the autoregressive distributive lag (ARDL) bound test and error correction model (ECM) based on the conclusion of the unit root test. Results: The findings indicate that the inflation rate has a positive and significant effect on household final consumption expenditure in both the short and long run. Conclusion: The study concludes that an unstable inflation rate has a great impact on household final consumption expenditure in Cameroon.