Effects of Inflation on Household Consumption Expenditure: An Empirical Insights From The Indian Economy

The research conducted a practical analysis to investigate the impact of inflation on the spending patterns of households in India for the period of 1991–2020. The study used the augmented Dickey–Fuller test (a test to check the stationarity of the data), and the selected variables are stationary at first difference. The ordinary least squares method and various diagnostic and stability tests have been used to analyse the data. The study’s empirical results indicate a notable and negative correlation between inflation and household consumption expenditure in India. As a result, the study suggested that the government should strive to maintain consistently low and stable prices in order to mitigate the detrimental impact of inflation on private spending. It is valuable to conduct further research on causality and structural breaks in future studies.