Inflation and it's impact on consumer spending and savings behaviour

Abstract

Inflation is a key economic factor that significantly influences consumer spending behavior by reducing purchasing power and increasing the cost of living. This study examines the impact of inflation on consumption patterns, saving habits, and purchase decisions among consumers. The research focuses on how individuals adjust their spending priorities during periods of rising prices, particularly across different income groups.
The study is based on secondary data collected from various journals, research articles, and published reports. It analyzes the relationship between inflation and consumer behavior using a conceptual framework that includes mediating factors such as income level, employment status, consumer expectations, and interest rates.
The findings indicate that inflation leads to a shift in consumer behavior, where individuals prioritize essential goods and reduce discretionary spending. It also affects savings patterns, especially among middle- and lower-income groups who are more vulnerable to price increases.