ASSESSING THE IMPACT OF NEGATIVE BALANCES IN CURRENT ACCOUNTS AND INFLATION ON THE MINIMUM CONSUMER BASKET: A REGRESSION APPROACH

ABSTRACT

This paper investigates the interplay between the minimum consumer basket's value, negative current account balances, and inflation rates, as categorized by COICOP, through regression analysis. Using a comprehensive dataset with monthly observations from Macedonia, spanning December 2010 to May 2024, the study employs a multiple regression model to examine the impact of negative balances on personal current accounts and inflation on the minimum consumer basket. The analysis aims to clarify how these economic factors interact to influence consumer purchasing power and the cost of living. By empirically assessing these interconnections, the study reveals how economic imbalances, and inflationary pressures affect the affordability of essential goods and services. The findings provide crucial insights into the dynamics of current account deficits, inflation, and consumer expenditure. These insights are essential for policymakers to develop strategies that mitigate the negative effects of economic instability and inflation, thereby stabilizing consumer expenditure and protecting consumer welfare.

KEY WORDS: Minimum Consumer Basket, Negative Current Account Balances, Inflation (COICOP), Regression Analysis, Consumer Purchasing Power