New consumption survey reveals the cracks in the economy
Subscribe to enjoy similar stories. The Indian economy has grown steadily, but the lack of momentum in consumption and the impact of high food inflation have not gone unnoticed. The fact sheet of the latest Household Consumption Expenditure Survey (HCES), conducted between August 2023 and July 2024, confirms the lacklustre growth in consumption spending and a marginal shift from non-food items to food items due to high prices.
An average rural Indian consumed goods and services worth ₹4,122 per month, up 9.3% over the preceding 12-month period. For urban Indians, this monthly per capita expenditure (MPCE) was ₹6,996, up 8.3%. Food spending grew faster, at 10.8% and 9.7%, respectively.
But after adjusting for inflation, the MPCE grew just 3.5% in both rural and urban areas, and even slower for food MPCE (2.5% and 1.2%), a Mint analysis showed. This is broadly in line with the 4% growth in private final consumption expenditure, as shown from the national accounts data, in the fiscal year 2023-24. A marker of an economy’s progress is a decline in food’s share in household budgets.
That was the case between 2011-12 and 2022-23, when food’s share fell from 52.9% to 46.4% in rural areas and from 42.6% to 39.2% in urban areas. But in 2023-24, this rose by 0.66 percentage points (pp) and 0.51pp, respectively, as food inflation averaged 8.2% during the survey period, even as non-food inflation cooled. Vegetables contributed the biggest jump in spending in rural areas, with their share in monthly per capita spending rising from 5.4% in 2022-23 to 6% in 2023-24.
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