• A little over half or 56% of the household consumers surveyed believe that their average household savings will decline in FY23, while only 19% households expect an increase.
New Delhi: Low income amid high household expenses during the pandemic affected a large number of Indian households. For many, sustained high prices of vegetables, pulses, oil, milk and other essential commodities over the past 12 months have spelled trouble, as a large percentage of households are struggling to meet their needs. While global commodity prices have softened in recent times, they remain high with shipping and logistics costs being reflected in the prices of products and services. In most cases, the income of the households has not kept pace with the high inflation. Unlike government jobs, private sector employees do not get any relief in the form of DA or any other allowance to compensate for the rising cost. All this is driving deep cuts in consumer spending.
However, there has been some good news recently on the inflation front. The Wholesale Price Index (WPI) based inflation data declined to 4.95% in December from 5.85% in November. Consumer Price Index (CPI) inflation fell to 5.72% last month, below the Reserve Bank of India's (RBI) upper tolerance level of 6%.
LocalCircles conducted its first consumer survey for 2023 to understand the financial planning as well as the earning and savings status of Indian households. Over 37,000 responses were received from domestic consumers across 309 districts in India. Out of total respondents, 64% respondents were male while 36% were female. 42% citizens were from metros or tier 1 districts, 34% from tier 2 districts and 24% from tier 3, 4 and rural districts.
About 7% of households estimated a 25% drop in annual income for FY22-23, 22% estimated a 10-15% drop while 10% estimated a drop of up to 10%. 21% were unsure about the impact.
The first question in the survey sought to estimate the change in household income for FY23, ending March 2023. It asked the respondents, “Where do you think your household income will be in the current 12 months FY22-23 as compared to the last 12 months? FY 21-22?” In response, 60% of 12,036 household respondents indicated that they expected a decline in household income this year. 7% of them estimated a 25% decline in income, while 22% expected a decline of 10-15%. 10% expected a decline of anywhere up to 10%; and 21% were unsure about the level of impact but expected a decline. On the bright side, 25% of respondents 25% forecast higher household income in FY2022-23, while 7% are not projecting any change as the year ends on March 31, 2023.
A little over half or 56% of the surveyed household consumers believe that their average household savings will decline in FY23, while only 19% households expect an increase.
One of the biggest issues expressed by domestic consumers is the need to tap into savings to meet the needs. With the rise in prices of most essential commodities due to various global and domestic factors starting with the Russia-Ukraine War, combined with the rising cost of products and services affecting a middle-class family, many people are forced to pay for increased school fees. Had to dip into savings to pay. fees or buy a replacement phone. In some other cases, families had to dip into savings for basic needs, as retrenchments resulted in loss of jobs in the family.
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