In recent years, Iran\\\\\\\'s economic problems have increased inflation and subsequently affected fluctuations in consumption. Therefore, this research analyzed the impact of positive and negative inflationary shocks on consumption during the monthly period from April 2010 to March 2022 with the NARDL approach. This study considers GDP per capita, nominal interbank interest rate, and unofficial exchange rate variables as control variables. The results, supporting Duesenbery’s ratchet effect, show that positive and negative inflation shocks have an asymmetric effect on per capita consumption. One unit of positive inflation shocks growth causes a 0.012 decrease in consumption, and one unit of negative inflation shock causes a 0.049 increase in consumption. This means that there is always excess demand in the market; on the one hand, it is an expression of consumerism in Iranian society. Positive changes in real GDP increase real consumption by a coefficient of 0.733, and negative changes in GDP cause a decrease in consumption by a coefficient of 0.314. Empirical results also discovered long-run asymmetric effects between interest rates and consumption, so with one unit increase in interest rate, consumption decreases by about 0.133. With one unit decrease in interest rate, consumption increases by about 0.117. This study suggests policymakers should prioritize low inflation and economic growth goals in implementing monetary policies to increase household consumption and well-being.

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