By Manoj Kumar
Indian household spending on non-food items such as transport, clothing and entertainment rose in both rural and urban areas in 2023/2024, while spending on staples such as wheat and rice fell, a government report showed on Friday.
The Household Consumption Expenditure Survey for 2023/24, conducted from August 2023 to July 2024, shows that non-food items represent around 53% of per capita expenditure in rural areas, compared to around 47% in 2011/12 and 60 % in urban areas, up from about 57%.
The shift in spending patterns is expected to lead to a decrease in the weighting of food products in the consumer price index (CPI), which is used by the central bank to frame monetary policy.
Ministry of Statistics and Program Implementation officials previously indicated plans to revise the base year for retail inflation data from 2012 to 2024, incorporating these findings.
Analysts said food is likely to have a smaller weighting in India’s consumer price index in the near future.
The monthly difference between per capita consumer spending between urban and rural areas has narrowed to 70% in 2023/2024 from 84% in 2011/2012, the report said.
In nominal terms, rural consumer spending rose 9.55% year-on-year to 4,122 rupees ($48.23) per month for the full year through July, from 3,773 rupees the previous year, while urban spending rose 8.31 % rose from Rs 6,459 to Rs 6,996, the report showed.
Adjusted for inflation, rural spending grew by just 3.5%, while urban spending remained subdued due to retail inflation of around 5.5% in the fiscal year ending in March.
Compared to 2011/2012, consumer spending in rural areas increased by 45.4%, more than the 38.1% increase in urban areas, reflecting a slight convergence in consumption patterns.
Consumer spending, which represents about 58% of India’s economic activity, remains a crucial driver of economic growth in Asia’s third-largest economy.
($1 = 85.4710 Indian Rupees)
(Reporting by Manoj Kumar; Editing by Hugh Lawson)
