The Indian consumer spending pattern is changing drastically, where households allocate a bigger proportion of their money toward non-necessary goods. The latest Household Consumption Expenditure Survey shows that the average monthly spending per person in rural areas has reached ₹3773, a massive jump from ₹1430 in the previous survey. In the urban area, the average monthly spending has also risen from ₹2630 to reach ₹6459.
Key Consumer Spending Statistics India
- The share of food expenses in total consumption in rural and urban areas declined from 53% to 46.4% and 42.6% to 39.2%, respectively, between the financial years 2011-12 and 2012-23.
- Non-food consumption in rural India has increased from 47% to 53.6%, and in urban India, it has increased to 60.8% from 57.4%.
- Mandatory spending on food and beverages, consumer services, and durable goods (televisions, refrigerators) has surged.
- Cereals and pulses (wheat, rice) spending has decreased the most.
Rural Spending Surge
The data show a clear increase in consumer spending in all parts of India during recent years. From 2011/12 to 2022/23, the average monthly per capita expenditure drastically grew from ₹1430 to ₹ 3773 (45.54 $), translating into a huge rise of 163%.
Urban Spending Growth
Both rural and urban parts of India have seen similar growth of 145%, with average monthly per capita expenditures ranging from ₹2,630 to ₹6,459 ($77.95) in the rural sector and ₹2,056 to ₹4,663 ($74.00) in the urban area during the same period.
Shift from Food to Non-Food Consumption
For instance, when people travel less or consume less meat and animal products, it potentially means that they purchase and eat fewer related food items, like flight tickets or cheese.
Though the share of food has experienced a slight decline, falling from 53% to 42.4% in rustic areas and from 42.6% to 39.2% in urban regions, non-food consumption, which correlates inversely with this metric, also spiked. In rural India, it grew from 47% to 53.6%, while in urban areas, it rose from 57.4% to 60.8%.
Price Inflation and FMCG Spending
There is some similarity with the survey findings by Boston Consulting Group (BCG) and the Confederation of Indian Industry (CII) according to which the packaged household staples, care items, or food/drinks more than doubled in the price range between 2012 and 2023. Although we had to contend with the price increase, we still remitted a substantial 5.4 trillion rupees of FMCG products in 2023, a 45% increase compared to 2019.
Technology’s Role in Driving Consumer Spending
Technology has played a vital role in driving consumer spending. Here are the topic-wise details on how it affects.
Rise of E-Commerce and Digital Payments
Along with that, the expanding influence of technology among Indian consumers has greatly simplified the buying process and thus enabled increased consumer spending. The rise of e-commerce platforms, online payment gateways, and virtual shopping ideas has altered the consumer trend, especially in cities where the internet is more widespread.
Convenient Access and Attractive Deals
Discounts and special deals not only help but entice customers and encourage them to make the move from e-commerce to traditional brick-and-mortar stores.
Current technological innovations not only give customers continuous access to numerous products but also make it possible to present nice price jumps, discounts, and easy payments, which makes people more likely to buy soon on a whim and spend casually.
Streamlined Shopping Experience
For instance, incorporating technology has eliminated the overwhelming experience of shopping by empowering customers to shop at just the click of a few buttons. This convenience aspect, in addition to the price comparison and review reading facility, has enabled Indian customers to gain knowledge and increase their savings.
Future Impact of Technology Adoption
Touting the growing role of technology, it shouldn’t be surprising that its importance will only increase in the coming time. This, in turn, will affect consumer behaviour and discretionary spending within the country.
Conclusion
The last period’s Consumer Expenditure Survey results, which have been released, show that Indian consumer patterns are changing now because of the rising income rate and a movement towards more discretionary spending. Whilst essentials like food items form the biggest category, the Indians have been able to allocate a bigger share of their budget to non-essential items like processed food(s), beverages, consumer services, and durables. Such a trend will be sustainable because of driving forces like urbanization, growing disposable money among consumers, and businesses’ use of technology to understand consumer needs.
