Investigating the effect of Inflation on Household Standard of Living in Nigeria; Empirical Evidence Using ARDL Model

The study investigates the effect of Inflation on Standard of living in Nigeria using time series data (1980-2023), that are mainly sourced from Central Bank of Nigeria (CBN) statistical bulletin and National Bureau of Statistics (NBS) of various issues and World Development Indicator (WDI). Auto-Regressive Distribution Lag (ARDL) econometric technique of analysis were employed given mixed order of integration of the variables and existence of long run relationship among the variables using cointegration bound test. The empirical findings indicate that, there is a negative and statistically significant relationship between inflation, interest rate and standard of living variable within the study period. This implies that an increase in inflation and interest rate by 1% will leads to reduction in standard of living by 0.06% and 0.19% respectively, and it is significant at 1%. Based on the empirical finding, the study make the following recommendations. Government and various stakeholders such as Central Bank of Nigeria (CBN) should make necessary policies that will lower the rate of inflation, thereby lowering the cost of living in Nigeria as such will increase the living standard of the people and also bring about economic growth and development in the country.