Deviation in Consumer Behavior and its Impact on Inflation Rates and Indicators of Economic Development in Egypt

Abstract

This research was interested in studying and analyzing the consumer behavior of the Egyptian society and the extent of the deviation in it from the level of rational consumption, and the effect of that on inflation rates and economic development. The research has settled on the selection of controls and standards of consumer behavior in Islam as a criterion for measuring the extent of the deviation in the consumption behavior of the Egyptian society. The research found that there is a noticeable change in the consumption behavior of the Egyptian society towards increasing the MPC at the expense of the MPS from 1994 and continued in the same direction and at rates of increasing until 2018. By examining the relationship between the inflation rate in Egypt as a dependent variable and the rates of change in total final consumption, a correlation relationship with direct and significant effect was found at a level of significance less than 5%. It was predicted that the inflation rate could have been reduced from 14.4% in 2018 to 2.08%, -0.9% for the same year if the final consumption was reduced the total is by the estimated extravagance, and the estimated extravagance and squandering, respectively.
Also, by examining the relationship between local savings rates and local investment in relation to GDP, and testing the relationship between local investment as a ratio to GDP and the rate of growth in GDP in Egypt, it became clear that there is a correlation relationship with a direct and significant effect between them at a level of significance less than 5%. Assuming that domestic savings increase by the amount of extravagance and squandering estimated, the rate of domestic savings to GDP increases from 6.2% to 18.52%, and then the rate of domestic investment to GDP increases from 16.66% to 35.79%, which leads to a higher rate of GDP growth For the same year, from 5.31% to 8.91%, or 67.8% of its value. This proves the effect of the deviation in the consumption behavior of the Egyptian society on inflation, savings, investment, the rate of economic growth and economic development.
This research has exposed to means of addressing the deviation in the consumer behavior of Egyptian society, starting from the fact that this phenomenon is not a result of the moment and that its treatment can’t come at once, but rather gradually over the long term, through moral persuasion of members of society and direct and indirect economic policies that work To control the consumption behavior of society within the framework of rational behavior.