Impact Of Inflation On The Standard Of Living In Nigeria: An ARDL Approach

Inflation remains a major macroeconomic challenge in Nigeria, with persistent increases in the prices of goods and services exerting considerable pressure on household purchasing power and economic welfare. This study examines the impact of inflation on the standard of living in Nigeria over the period 1970–2025.The study adopted an ex-post facto research design, using annual time-series data, with Gross Domestic Product per capita (GDPPC) as a proxy for standard of living. Data were analysed using the Autoregressive Distributed Lag (ARDL) model, bounds testing for cointegration and error correction mechanism. Results showed that inflation had a negative and statistically significant effect on standard of living both in the short run and long run, indicating that rising inflation reduces purchasing power and economic welfare. Interest rate had a negative and statistically significant effect on standard of living in the long run, but its short-run effect was statistically insignificant. Exchange rate had a negative and statistically significant effect in the short run, while its long-run effect was positive and statistically significant. The ARDL bounds test confirmed the existence of a long-run relationship among the variables, while the error correction coefficient indicated that about 21.82% of short-run disequilibrium is corrected towards long-run equilibrium each period. The study concludes that inflation remains a major constraint to improving standard of living in Nigeria and recommends effective inflation-control measures, affordable lending rates, exchange-rate stability and increased domestic production.