consumption expenditure in Nigeria from 1986 to 2024. Using household expenditure growth as the dependent variable, the study incorporated real exchange

rate, import growth, interest rate, and real GDP per capita as explanatory variables. The study

employed the Vector Autoregressive (VAR) model, supported by Impulse Response Functions

(IRFs) and Variance Decomposition (VD), to analyse the dynamic relationships among the

variables. The findings revealed that exchange rate depreciation exerts a significant negative

effect on household consumption in Nigeria (EXR(-1) = -0.001648; t = -2.276, p < 0.05). In

contrast, import growth (IMP(-1) = 0.171908; t = 2.140) and GDP per capita (RGDP =

0.046999; t = 2.530) positively influenced consumer spending, while interest rate showed no

significant effect. Impulse response analysis indicated that exchange rate shocks depress

household consumption up to the fifth period, while variance decomposition showed that

exchange rate shocks accounted for 19.56% of forecast error variance in consumption by the

tenth period. The study concludes that exchange rate depreciation weakens household

purchasing power and consumer spending in Nigeria. It recommends exchange rate

stabilization policies, import substitution strategies, and measures aimed at improving

household income and macroeconomic stability.