Title: Analyzing Household Budget Adjustments in Response to Rising to Rising Prices in Nigeria
Authors: Amafade-Goodluck, Phinna, Ehiedu, Victor Chukwunweike and Igho Anthonia Okiemute
Volume: 9
Issue: 5
Pages: 1-5
Publication Date: 2025/05/28
Abstract:
This study examines the impact of inflation on household budgeting behavior in Nigeria, where persistent inflation poses a major macroeconomic challenge. Utilizing a qualitative approach based on literature and secondary data, the research explores how households reallocate expenditures, adopt coping strategies, and navigate financial pressures induced by rising prices. Findings indicate that inflation leads to significant budgetary adjustments, with households prioritizing essential needs such as food, housing, and energy while cutting back on non-essential items like entertainment, healthcare, and education. Lower-income households are disproportionately affected, often resorting to informal credit, depleting savings, or engaging in subsistence activities. Budgeting emerges not merely as a reactive mechanism but as a strategic tool for financial resilience. Households with higher financial literacy demonstrate more effective adaptation through proactive planning, digital tools, and spending prioritization. The study under-scores the importance of flexible budgeting frameworks and financial education in enhancing household resilience. Policy recommendations include the implementation of inflation-adjusted social safety nets and targeted financial literacy programs to support vulnerable populations. These insights contribute to the broader understanding of household-level responses to inflation in developing economies, with implications for economic stability and poverty reduction.