DYNAMICS BETWEEN CONSUMPTION EXPENDITURE AND GROSS NATIONAL INCOME IN NIGERIA

Abstract

This study examines the relationship between Gross National Income (GNI) and Consumption Expenditure (CE) in Nigeria from 1990 to 2023. Using secondary data sourced from the World Bank and the National Bureau of Statistics (NBS), the study applies descriptive statistics, trend analysis, and regression analysis to establish the dynamics between these key macroeconomic indicators. Descriptive analysis reveals consistent growth in both GNI and CE, with average annual growth rates of 5.2% and 4.8%, respectively. Trend analysis indicates that while both variables exhibit cyclical fluctuations, they follow a long-term upward trajectory. The regression model shows a strong positive relationship (R = 0.982) between GNI and CE, with an R² of 0.964, implying that 96.4% of the variation in CE is explained by GNI. Hypothesis testing confirms the significance of this relationship (p < 0.05), supporting the proposition that increases in GNI lead to corresponding increases in CE. The study concludes that national income remains a vital determinant of consumer spending and economic growth in Nigeria. It recommends policies that enhance productivity, diversify income sources, and strengthen consumer confidence to sustain growth in household expenditure.