A Critical Survey Of Inflation And Its Effects On The Living Standard Of Citizens (An Experience Of Nigeria)

A Critical Survey Of Inflation And Its Effects On The Living Standard Of Citizens (An Experience Of Nigeria)
Abstract
Standard of living is very germane to every economy. It gives a broad view of how the economy is fairing on a global scale. If an individual cannot get required basic necessities due to low purchasing power, his/her marginal propensity to consume (MPC) rises which makes it more difficult for the individual to live comfortably hence the standard of living dips Several researches have been carried out but the standard of living still remains abysmally low. From empirical review we find that several countries in sub-Sahara Africa, Nigeria inclusive suffers from low standard of living. The case of Nigeria being evidently sever as the Nigeria currently the poverty capital of the world with over 91 million people living below in abject poverty. Time series data on inflation rate and standard of living proxied by the Human Development Index (HDI) between 1998 and 2020 was used for this research. Augmented Dickey Fuller and Phillip-Perron unit root tests were used to test for stationarity of the data. Based on findings, the Auto Regressive Distributed Lagged (ARDL) model was adopted for inferential analyses. Descriptive statistics employed include skewness, kurtosis, Jarque-Bera test and Breuch- Pagan-Godfrey serial correlation LM test, Breuch-Pagan test for heteroscedasticity and the Durbin-Watson test. Results indicated that there exists a long-run relationship between Inflation and standard of living. Inflation exhibited a negative and significant effect with a coefficient of -0.034 against a P-value of 0.017 which implied that a unit increase in inflation brings about 0.034unit decrease in standard of living over the period of study. Based on findings we recommend that a proper blend of fiscal and monetary policies should be employed to improve the standard of living of Nigerians.
Table of Content
Chapter One:
Introduction
- 1.1 Background of the study
- 1.2 Statement of the problem
- 1.3 Objective of the study
- 1.4 Research questions
- 1.5 Hypothesis of the study
- 1.6 Significance of the study
- 1.7 Scope of the study
- 1.8 Limitation of the study
- 1.9 Definition of terms
- 1.10 Organizations of the study
Chapter Two:
Review of Literature
- 2.1 Conceptual Framework
- 2.2 Theoretical Framework
- 2.3 Empirical review
Chapter Three:
Research Methodology
- 3.1. Research Design
- 3.2. Sources of Data
- 3.3. Model Specification
- 3.4. Measurement of Variables
- 3.5. Estimation Techniques employed
Chapter Four
Presentation of Data and Analysis
- 4.1 Introduction
- 4.2 Presentation Data
- 4.3 Analysis of Data
- 4.4 Discussion of Findings
Chapter Five
Summary, Conclusions and Recommendations
- 5.1 Introduction
- 5.2 Summary of the Study
- 5.3 Conclusions
- 5.4 Recommendation
- 5.5. Implication of Research and Practice
- 5.6. Future research
- References
Chapter One
Introduction
1.1 Background of the Study
Inflation, simply put is the continuous fall in the purchasing value of money such that more money chases fewer goods and services which adversely impacts the economy. Inflation rate can influence the standard of living of the population. Once inflation exceeds its required threshold, regulators deploy policy instruments to control and cushion its effects on the population as part of the broad macroeconomic stabilization objectives. If an individual cannot get required basic necessities due to low purchasing power, his/her marginal propensity to consume (MPC) rises which makes it more difficult for the individual to live comfortably hence the standard of living dips. As the MPC increases, the marginal propensity to save (MPS) declines which culminates in negative savings mobilization with adverse consequences for financial deepening and eventual economic growth and development of the country.
High inflation rate characterizes the economies of less developed economies while the advanced economies are characterized by low inflation rate. This exemplifies why the standard of living of people living in less developed economies is low and the standard of living of their counterparts in advanced economies are high.
Farid, Khan, Warriach and Warriach (2012) point out that as the prices of commodities increase, consumers’ marginal propensity to save declines thereby adversely affecting standard of living. Farid, et al (2012) further adduced that uncertainty in prices of goods and services results in such individual desires to earn more income which causes them to take on more income generating jobs sometimes at the expense of their health in a bid to maintain a minimum standard of living. This would also have a ripple effect culminating in stunted economic growth and development of the country involved.
According to Zou in 2011 inflation is an unpreventable attribute of every economy in the world. It has an impact on every nation, both developed and developing, in both good and harmful ways. Zou et al. (2011), said inflation is a significant contributor to social and economic instability and disorder. Both conceptually and experimentally, it is one of the most often observed and tested economic variables. Its sources, effects on other economic variables, and total economic cost are all well-known and recognized (Zou , 2011). Pakistan, as a developing nation, has been unable to avoid rising inflation, as well as its causes and repercussions, from year to year. In late 2003, Pakistan’s inflation rate began to increase after maintaining relatively low for a long period (Mohsin and Schimmelpfennig, 2006). In Pakistan, the influence of money supply seems to be important in determining food price inflation (Ashfaque and Qasim, 2016). which harmed both family budgets and consumer buying power People strove to preserve their level of life, but it eventually declined. In Pakistan, inflation stayed around 5% for the first four years of the new century until rising to 9.3% in 2004-05. In 2005-06, it reached an all-time high of 8%. Wheat price rise and the strength of the currency rate remained uneven. However, it seems that excessive money flows to the public and private sectors, as well as increases in import prices in 2003-04 and 2005-06, as well as increases in wheat prices in 2003-04 and 2004-05, have pushed inflationary pressure to dangerously high levels (Farooq, H. Mian et al., 2008).
According to the Pakistan Economic Survey 2009-11, inflation was 14.1 percent in the current fiscal year 2010-11 (July-April), compared to 11.5 percent the previous year, while the PIDE Inflation Expectations Survey for March 2011 predicted 15.5 percent inflation for April 2011 and 16.4 percent for May 2011. Inflation is anticipated to continue around 17.0 percent for the next six months and 16.6 percent for the present year, according to the findings. Inflation, as an economic phenomenon, will undoubtedly have an impact on economic activities, which will often have a negative impact on public finances because the purchasing power of money will be reduced, and in order to obtain something, more money will be required, which will eventually affect community/population builders. A human development index (HDI) was first created by the United Nations Development Program (UNDP) in 1990 and is published annually in the Human Development Report (HDR). According to the UNDP, HDI is a composite index that combines three very fundamental areas of human development and is used as an indicator of I health: age life (longetivity); (ii) education: knowledge; and (iii) the economic field: acceptable living conditions (decent living).
1.2 Statement of the Problem
Nigeria is a country which has 87 million people living in abject poverty with an estimated increase to about 91 million by the first quarter of 2019 according to the World Poverty Clock (2018). This makes Nigeria the country with the highest population of people living in poverty in the world. The World Bank (2018) human development index (HDI) ranking of countries equally ranked Nigeria among the group of low HDI countries with HDI of 0.532 and life expectancy of 53.7 years in compared to developed countries like Norway and Switzerland which were grouped among countries with high HDI. Norway has a high HDI of 0.953 and life expectancy of 82.3 years and Switzerland on its part has HDI of 0.944 and life expectancy of 83.5 years. The Global Hunger Index (GHI) (2018) also ranked Nigeria as 103 out of 119 countries with a score of 31.1. The organization stated that this score indicates that Nigerians suffer from a chronic problem of hunger. All these indicate the deplorable standard of living in Nigeria and this problem has remained hydra-headed and governments at all levels have not been able to improve on the living conditions of the populace.
1.3 Objective of the Study
The primary objective of the study is as follows
- To evaluate the causes of inflation on a country.
- To determine if inflation has a significant effect on the income level of Nigeria citizens.
- To find out if there is a relationship between inflation and standard of living of citizens of a nation
- To find out strategy on how the effect of inflation will not be too harsh on living standard of living of citizens.
1.4 Research Questions
The following questions have been prepared for the study
- What is the causes of inflation on a country?
- Does inflation have a significant effect on the income level of Nigeria citizens?
- Is there is a relationship between inflation and standard of living of citizens of a nation?
- What are the strategy on how the effect of inflation will not be too harsh on living standard of living of citizens?
1.5 hypothesis of the Study
The following research hypothesis was formulated and tested by the study;
Ho: Inflation has no significant effect on the standard of living of Nigerians
Hi: Inflation has a significant effect on the standard of living of Nigerians
1.6 Significance of the Study
This study will focus on inflation and its effects on the living standard of citizens. Hence this study will be significant to policy makers and Nigerian government on the need to work on the economy in other to avoid inflation and its ripple effect on the living standard of citizens.
This study will be beneficial to the academic community as it will contribute to the existing literature.
1.7 Scope of the Study
This study will evaluate the causes of inflation on a country. The study will also determine if inflation has a significant effect on the income level of Nigeria citizens. The study will further find out if there is a relationship between inflation and standard of living of citizens of a nation. Lastly, the study will find out strategy on how the effect of inflation will not be too harsh on living standard of living of citizens. Hence the study is delimited to Nigeria.
1.8 Limitation of the Study
This study was constrained by a number of factors which are as follows:
Just like any other research, ranging from unavailability of needed accurate materials on the topic under study, inability to get data
Financial constraint , was faced by the researcher ,in getting relevant materials and in printing and collation of questionnaires
Time Factor: Time factor pose another constraint since having to shuttle between writing of the research and also engaging in other academic work making it uneasy for the researcher
1.9 Definition of Terms
Inflation:
The action of inflating something or the condition of being inflated.
Living Standard:
Standard of living generally refers to wealth, comfort, material goods, and necessities of certain classes in certain areas.
1.10 Organizations of the Study
The chapter one consist of the introductory part of the study which includes the study background, the statement of the research problem, the study objective and scope of the study.
The second chapter is a critical review of other literatures relevant to the study and its objectives including the theoretical framework for the study. While the third chapter is methods of data collection, sampling and data analysis used in conducting the study. The fourth chapter centres around the research findings including an analysis of how it relates to previous findings. The fifth chapter consists of the summary of findings, conclusion and recommendations base on the study objectives.
Chapter Five
Summary, Conclusions and Recommendations:
5.1 Introduction
This chapter summarizes the findings on a critical survey of inflation and its effects on the living standard of citizens (an experience of Nigeria). The chapter consists of summary of the study, conclusions, and recommendations.
5.2 Summary of the Study
In this study, our focus was on a critical survey of inflation and its effects on the living standard of citizens (an experience of Nigeria). The study is was specifically focused on examining the causes of inflation on a country; determining if inflation has a significant effect on the income level of Nigeria citizens; finding out if there is a relationship between inflation and standard of living of citizens of a nation and finding out strategy on how the effect of inflation will not be too harsh on living standard of living of citizens..
The study adopted the ex-facto research design. This study used ARDL as the variables are I(1) and I(0). The bound test shows that there is a long relationship among inflation and human development index .
5.3 Conclusions
Based on findings we can support the study of Doguwa (2015) which opined that at a certain level inflation becomes inimical to economic growth. By implication we can hereby conclude that inflation rate has effect on standard of living in Nigeria. The study also supports the work of Chimobi, O. P. (2010) who also opined that high inflation had a negative and significant effect on economic growth. The study hereby recommended that the government adopt a blend of fiscal and monetary policies to curb the high inflation and elevate the standard of living of Nigerians. The reason for this is based on the fact that the inflation challenge faced by Nigeria cannot be combatted by strictly adopting fiscal policies or otherwise.
5.4 Recommendation
In the conclusion of this study the researcher summarized the findings of the study and confirmed that inflation hurts the standard of living and real purchasing power of society, the study also discovered that inflation in the country is worsening after time and the government must set a policy for controlling inflation or at least to slow it’s rate. The researcher recommended the following points:
- The ministry of finance should impose heavy restrictions to the imported goods since they are causing inflation or taking a huge contribution this worsening situation.
- The government should encourage and improve the central bank in order to manage the exchange rate and take back the determination of exchange rate as well as supply of money to distribute efficiently.
- Since inflation is big disaster in here Nigeria the government must set policies towards that problem and the ministry of commerce should participate and also the ministry of planning should take part of planning this policy.
- The government must improve the standard of living of individuals in order to reduce the riskiness of inflation.
- Business community must use domestic produced goods rather than imported goods, this would help the infant industries to produce more commodities with lower prices and the purchasing power of the society will go up and the life style of the population will be better, this is will cause economic growth and the society will save money, which can create investment opportunities and new labor will be used and functioning resources will work
- Business community should improve their investment capacity for increasing employment activity in order to improve the standard of living.
- Business men should give care their community and charge as low prices as possible, the people and the other provinces are weakened by high prices of commodities, so the merchants or business community must think of their society and stop seeking high profits which effects the life style of the population and lower the prices as possible.
5.5. Implication of Research and Practice
The negative effect inflation rate exhibited on standard of living implies that increase in inflation engenders decrease in the standard of living. This finding is in line with our a priori expectations. Our findings on inflation is also in line with theory in literature and findings of other researchers like Doguwa (2015) who found that inflation at a high level is inimical to economic growth in Nigeria.
5.6. Future Research
During the course of this study we have found that inflation is not the only factor responsible for the poor standard of living in Nigeria, therefore future researchers can adopt other factors in relation to standard of living in Nigeria.


The Complete Material Will Be Sent to You in Just 2 Steps
Quick & Simple…
![]()
Make Payment (Through Transfer) of ₦5,000 to the Account Below
![]() | Acc No: 0811003731 |
| Samphina Academy | |
| Current Account |
Or CLICK HERE To Pay With Debit Card
| FOR STUDENTS OUTSIDE NIGERIA | |
| CLICK HERE To Pay With Card ($15) | |
| FOR GHANA STUDENTS (GHS 100) | |
![]() | MTN MoMo |
| 0553978005 | |
| Douglas Osabutey | |
![]()
Send the Following Details on WhatsApp ( 07062590260 ) After Payment
- Payment Details
- TOPIC: A Critical Survey Of Inflation And Its Effects On The Living Standard Of Citizens (An Experience Of Nigeria)
The Complete Material Will Be Sent To You On WhatsApp After Receiving Your Details
T & C Apply
Students Review
List of Related Works
Effects Of Value Added Tax (Vat) On Consumers’ Standard Of Living In Adamawa State
Critical Assessment Of The Impact Of Job Losses On Standard Of Living In Nigeria
The Effect Of Value Added Tax (VAT) On Consumer’s Standard Of Living
Skill Acquisition, Unemployment And Standard Of Living In Nigeria
The Effects Of Fuel Subsidy Removal On Nigerians’ Standard Of Living
The Impact Of Millennium Development Goals (MDGS) On The Standard Of Living Of Rural Dwellers
An Investigation Of The Effects Of Overpopulation On The Living Standard Of Citizens In Lagos State
The Impact Of Millennium Development Goals (MDGs) On The Standard Of Living Of Rural Dwellers
Seasonal Flooding And Household Poverty In Rivers State (2012–2024)
The Impact Of Government Expenditure On Standard Of Living In Nigeria
Effect Of Exchange Rate And Inflation On Nigeria’s Economic Growth
Implication Of Inflation On The Nigerian Economy
Unemployment, Inflation And Poverty In Nigeria
Impact Of Inflation Of Property Value In Nigeria
An Empirical Analysis Of Fiscal Imbalances And Inflation
The Effectiveness Of Fiscal & Monetary Policies In Controlling Inflation
Unemployment And Inflation In Nigeria
Statistical Analysis On The Monthly Inflationary Rate In Nigeria (1995-2010)
Signal Extraction From The Bond Market And Inflation Forecasting In Nigeria
An Investigation On The Effect Of E-Naira On Inflation
Impact Of Inflation On Financial Statement Of An Organization
The Impact Of Exchange Rate Fluctuations On Inflation In Nigeria
Impact Of Unemployment And Inflation On The Economic Growth In Nigeria
The Impact Of Inflation On Government Spending In Nigeria Economy
The Impact Of High Fuel Cost On The Public Transportation System In Ilorin
The Impact Of Salary Increase On Inflation In Nigeria
Impact Of Inflation On Government Spending In Nigeria
Impact Of Naira Devaluation On The Manufacturing Industry: A Case Study Of Dangote Sugar Refinery
Effect Of Inflation And Interest Rate On Economic Growth Of Nigeria
Naira Exchange Rate Depreciation And Domestic Inflation In Nigeria
Causes, Effect And Solution To Inflation In Nigeria: A Case Study Of Edo State
Inflation Control Through The Application Of Central Bank Of Nigeria
Relationship Between Unemployment And Inflation In Nigeria (1980-2012)
Effects Of Unemployment And Inflation On Economic Growth In Nigeria, 1986-2012


