The Influence of Perceived Market Uncertainty on Consumer Decision-Making: A Focus on Price, Income, and Exchange Rate Dynamics

This research studies the relation between perceived market uncertainty and consumers’ consumption decisions in unstable markets, as the Palestinian market that witnessed multiple political conflicts and economic instability in recent decades. Market uncertainty includes three sub variables: perceived price change, perceived income change, and perceived change in currency exchange rates. Also, the study examines the moderating influence of consumers’ income and the working sector. A survey-based methodology was adopted and a convenience sample was implemented. Two hundred and twenty-six consumers from the West Bank were surveyed using structured questionnaires. Structural Equation Modeling (SEM) was conducted by using the Smart-PLS 4 program. The results show that the respondents believe that the prices in the Palestinian market are continuously increasing while their income and buying power are decreasing. Furthermore, the results indicate that the Palestinian market faces high levels of uncertainty regarding perceived changes in prices, income, and currency exchange rates. Also, the three independent factors significantly negatively affect consumer consumption decisions. The moderating effect of consumers income was found to be insignificant while the work sector mediates the only the relationship between perceived currency exchange rate and consumption decision. The results of this study are of high importance for businesses and policymakers since it provides them with valuable information about the consumers’ perceptions that can help them enhance their strategies and plans for better dealing with the unstable market situation.