The Influence of Inflation on Consumer Expenditure Dynamics and Savings Practices: Exploring The Role of Fintech Tools in Managing Personal Finances

Abstract

Inflation is the consistent raise of price of commodities in an economy which reduces the purchasing power of the people. It affects the affordability of the consumers’ towards satisfying their needs. This research broadly analyses the impact of inflation on consumption and savings practices among individuals, with the intention of understanding how the financial behaviour of the individual evolve in response to rising prices. The study explores key aspects, including how inflation affects consumption patterns, influences savings behaviors, and shapes individuals' financial decision-making processes. Additionally, it examines how people navigate these challenges by utilizing financial technology (fin-tech) tools to manage their finances more effectively. The findings discloses that inflation significantly influences consumption habits, with individuals prioritizing essential expenses and adopting coping strategies to manage rising costs. Regarding savings practices, a majority reported being able to maintain minimum savings and expressed concerns about inflation impacting their ability to save for the future, prompting them to seek optimization strategies. Furthermore, the research indicates that fin-tech tools, particularly mobile banking apps and digital wallets, play a crucial role in tracking and managing daily spending habits, enhancing financial literacy, and decision-making regarding savings. Thus, this study contributes to a better understanding of how inflation impacts consumption and savings practices, providing insights that can inform policymakers, financial institutions, and individuals in developing effective strategies to navigate inflationary environments.