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Inflation Slams Indian Consumers Ahead of Festive Season
Oct 5, 2012 7:30 AM
By Dilipp S Nag
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RAPAPORT... A majority of Indian consumers will be forced to cut spending this festive season in order to meet their monthly expenses as persistently high inflation eats away their disposal income, according to a survey conducted by ASSOCHAM.
The survey on "High prices reduce festive spirit” revealed that more than 71 percent of the respondents from the middle- and lower-income family groups across the country overwhelmingly cited inflation, fewer job opportunities and shrinking salary packages this past year as reasons why their festive season will be lackluster. More than 87 percent of the respondents said that monthly grocery bills have jumped to about $116 (INR 6,000) from $39 (INR 2,000) in the past 12 months.
During the 2011 festive season, families spent nearly 29 percent of their salary, on average, towards Diwali-related shopping, sweets and gifting, among other things, ASSOCHAM noted without providing an expected percentage for this season. The majority of survey respondents between August and September 2012, stated that they plan to spend less on items given that prices have jumped, while their value of savings has decreased. But about 17 percent of respondents said they are saving for big purchase.
Most of the respondents plan to cut personal expenses or shop bargains to keep their festive budgets under control. More than 54 percent of the respondents will only buy items on sale or that have been discounted, while 27 percent will spend less on sweets and clothing. About 12 percent of those surveyed said they will buy fewer gifts, while 5 percent will purchase recycle gifts and the rest, 2 percent, will buy a group gift.
The survey also observed that only a small percentage felt that festivals are the time to splurge, even as discounts remain the biggest attraction for most buyers. Over 78 percent of the respondents said that if they plan to spend, higher discounts will be the incentive.
More than 65 percent of the respondents intend to make sweets and savory treats at home this season to save money. So, they may save around 20 percent to 30 percent by relying on these homemade resources, according to the survey.
ASSOCHAM stated that consumers have become savvy as most of the respondents opted for an instant cash discount as their best deal, rather than choose items where they would have to spend more for stuff they may not actually need. The majority of them are looking for discounts of up to 50 percent, while 29 percent are eying two-for-one offers.
D.S. Rawat, ASSOCHAM’s secretary general, stressed that any further tightening of monetary policy will seriously aggravate the financial condition of a large number of households. He added that there is a strong case to pause any rate increases by the Reserve Bank of India (RBI) as this has already hit the manufacturing sector and compressed demand appreciably.
The survey stated that over the past five years, income has been halved, while expenditures have doubled and there has been more than 80 percent to 100 percent rise in the prices of essential items. Rawat said that the government must look to manage its wasteful expenditures by enforcing austerity measures so as to reduce its borrowing from the markets, which ultimately sooth interest rates there by providing some inflation relief.
The survey noted that double-digit food inflation and higher cost of borrowing had no effect on India's high income group for the same time period as it did not imbalance their earnings and spending.
ASSOCHAM conducted the survey in Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Hyderabd, Pune, Chandigarh and Dehradun. A little more than 200 employees were selected from each city. Delhi ranked first in curtailing their expenses followed by Mumbai, Ahmedabad, Chandigarh, Kolkata and Chennai.
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Tags:
ASSOCHAM, Consumers, Dilipp S Nag, Diwali, Festive, India, inflation, Rapaport, RBI, spending
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