The Relationship Between Inflation and Consumer Spending in Post-Pandemic Period

Tee, Yuen Tzi (2026) The Relationship Between Inflation and Consumer Spending in Post-Pandemic Period. Final Year Project (Bachelor), Tunku Abdul Rahman University of Management and Technology.

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Abstract

This study examines the relationship between inflation and consumer spending in the post-pandemic period using worldwide data from 2020 to 2023. Alongside inflation, the analysis also considers interest rates, GDP, unemployment, and consumer sentiment to provide a broader view of the macroeconomic drivers of household consumption. Panel data analysis is applied, allowing for both cross-country and time-series variation. The findings show that both inflation and interest rates have an insignificant relationship with consumer spending, indicating that their direct impact on consumption during this period was limited. In contrast, GDP growth and consumer sentiment are significant positive determinants of spending, while unemployment is found to significantly reduce it. These results suggest that policies aimed at sustaining economic growth, stabilising employment, and strengthening consumer confidence are more effective in supporting household consumption than focusing solely on price or interest rate adjustments