Fuel Price Variation And The Role Of Financial Inclusion In Household Consumption Among Nigerian Households: Evidence From Cross-Sectional Variation In PMS Prices

Publication Details

Publication Date

10/09/2026

Volume / Issue

Vol 1, Issue 4 (2026)

Article No.

071

Journal

British Journal of Contemporary Research

DOI

https://doi.org/10.67693/BJCR-EPX9L4DU

Received

31 Aug 2026

Views

45

Downloads

2

Abstract

This study examined the relationship between digital financial inclusion and the reaction of Nigerian households to changes in fuel prices based on the two theories proposed; Permanent Income Hypothesis (PIH) and Liquidity constraint theory, with the specific variables of interest being consumption of the Premium Motor Spirit (PMS) and total household expenditure (THE). Due to the changes in fuel prices in recent years and the elimination of subsidies, Nigeria is now facing a lot of economic vulnerabilities to Nigerian households, making it very important to understand the role of financial access in household welfare. Data from the Nigerian Household Tax Perception Survey for 2018 (a total of 6,394 national observations) was utilized in the study. Two primary outcomes were analysed: total household consumption expenditure and total household PMS expenditure (as a secondary outcome). This study used three indicators of financial inclusion: bank account ownership, having a mobile phone, and having banking infrastructure (ATM) in an area. Robust econometric models such as Quantile Regression and Generalized Linear Models (GLM) were used in the study. Because of the cross-sectional nature of the data, all findings should be interpreted as associations, and not as causal effects. The results of the analysis showed that there is a significant positive relationship between bank account ownership and total expenditure of the household in all models used. This indicates that the access to formal services is associated with the level of household consumption. However, ownership of mobile phones indicates positive but not significant association with fuel consumption but it also is linked to higher fuel prices. In addition, the differences between regions and between cities and rural areas show that there are important linkages with both total consumption and pricing outcomes. It was concluded that owning a bank account is positively related to consumption of households, but no causal interpretation can be made due to the study design. Recommendations made for policy are: increased availability of affordable banking facilities in less-developed areas, enhancements to the physical financial facilities and addressing structural inequalities issues in the regional fuel supply.

License

This article is published under the Creative Commons Attribution 4.0 International License . Free to read, share, and adapt with attribution.