Do Inflation and Credit Conditions Affect Consumer Market Expansion in Ghana? A Dynamic Consumption Approach: A Thematic Synthesis Review

The study synthesises existing theoretical and empirical literature on the relationship between inflation, credit conditions, and consumer market expansion in Ghana within a dynamic consumption framework. Consumer market expansion, proxied by household final consumption expenditure, is a key driver of economic growth in developing economies but remains highly sensitive to macroeconomic instability and financial market constraints, particularly in Ghana, where inflation volatility and credit access limitations persist. The study adopts a qualitative thematic synthesis approach covering literature published between 2010 and 2026, drawn from major academic databases. The analysis is grounded in Keynesian consumption theory, the permanent income hypothesis, credit constraint theory, and monetary transmission theory, conceptualising consumption as a dynamic process influenced by inflation, income fluctuations, credit accessibility, and monetary policy conditions. The originality of this study lies in its integration of inflation and credit conditions within a single dynamic consumption framework, rather than treating them as isolated determinants, as is common in existing literature. Its innovative contribution is the development of a unified interpretive synthesis that highlights how monetary policy transmission channels jointly shape consumption behaviour in Ghana. Evidence indicates that inflation reduces household consumption through erosion of real income, declining purchasing power, and increased uncertainty, while improved credit conditions enhance consumption by relaxing liquidity constraints and enabling intertemporal smoothing. However, these effects vary across contexts depending on financial system development and household access to formal and informal credit channels. The review further shows that inflation and credit conditions are interlinked through monetary policy transmission mechanisms, where inflationary pressures often lead to monetary tightening by the Bank of Ghana, increasing lending rates and reducing credit availability, thereby amplifying consumption contractions. The study concludes that consumer market expansion in Ghana is a dynamic and context-specific process shaped by interacting macroeconomic and financial constraints, offering a creative and integrated perspective that improves conceptual understanding and informs more coherent policy design.