<p class="bodytext">Data on household consumption expenditure provide information about how people spend their money and about the trends and directions in the economy. The important takeaways from the data released by the government last week are an increase in average monthly per capita consumption expenditure, a decrease in disparities between urban and rural areas and a high level of food expenditure which had shown a falling trend over a period. The average monthly per capita consumption expenditure in rural areas rose to Rs 4,122 in 2023-24, from Rs 3,773 the previous year. It increased from Rs 6,459 to Rs 6,996 in the urban areas. A significant part of the increase in consumption expenditure was on account of inflation. Adjusting for inflation, consumption grew at 3.5%, but it should be noted that this was much less than the GDP growth rate of 8.2%.</p>.India spends more on beverages and processed food than fruits, vegetables or eggs.<p class="bodytext">The spending on food items, as a share of total spending, went up in both rural and urban areas. In rural areas, it increased from 46.4% to 47.04% and in urban areas, from 39.17% to 39.48%. This is less than the share of spending on food in 2011-12, but it shows the impact of food inflation on household expenditure. The percentage share of food in average monthly expenditure had fallen from 52.9% in 2011-12 to less than 50% in rural areas, and from 42.62% to less than 40% in urban areas. The relative fall in food expenditure over the longer term is considered to be a good trend because it shows that people have more money to spend on other needs such as education, transport, and entertainment. While it is a good sign, the increase in food expenditure in the most recent period is a matter of concern, especially if the trend continues. The shift in consumption patterns, especially with regards to food items, may come into focus when the base year for the Consumer Price Index (CPI) is updated.</p>.<p class="bodytext">Another highlight of the survey is the narrowing gap between rural and urban spending. The monthly expenditure increased at a greater pace in rural areas than in urban areas. Consumption inequality has declined both in rural and urban areas. The urban-rural per capita spending disparity has come down from 84% to 70% in over a decade. This may be because of the increase in rural incomes, the spread of digital payment systems and increase in aspirations in the rural communities. That, again, is a good trend but it needs to be sustained.</p>
<p class="bodytext">Data on household consumption expenditure provide information about how people spend their money and about the trends and directions in the economy. The important takeaways from the data released by the government last week are an increase in average monthly per capita consumption expenditure, a decrease in disparities between urban and rural areas and a high level of food expenditure which had shown a falling trend over a period. The average monthly per capita consumption expenditure in rural areas rose to Rs 4,122 in 2023-24, from Rs 3,773 the previous year. It increased from Rs 6,459 to Rs 6,996 in the urban areas. A significant part of the increase in consumption expenditure was on account of inflation. Adjusting for inflation, consumption grew at 3.5%, but it should be noted that this was much less than the GDP growth rate of 8.2%.</p>.India spends more on beverages and processed food than fruits, vegetables or eggs.<p class="bodytext">The spending on food items, as a share of total spending, went up in both rural and urban areas. In rural areas, it increased from 46.4% to 47.04% and in urban areas, from 39.17% to 39.48%. This is less than the share of spending on food in 2011-12, but it shows the impact of food inflation on household expenditure. The percentage share of food in average monthly expenditure had fallen from 52.9% in 2011-12 to less than 50% in rural areas, and from 42.62% to less than 40% in urban areas. The relative fall in food expenditure over the longer term is considered to be a good trend because it shows that people have more money to spend on other needs such as education, transport, and entertainment. While it is a good sign, the increase in food expenditure in the most recent period is a matter of concern, especially if the trend continues. The shift in consumption patterns, especially with regards to food items, may come into focus when the base year for the Consumer Price Index (CPI) is updated.</p>.<p class="bodytext">Another highlight of the survey is the narrowing gap between rural and urban spending. The monthly expenditure increased at a greater pace in rural areas than in urban areas. Consumption inequality has declined both in rural and urban areas. The urban-rural per capita spending disparity has come down from 84% to 70% in over a decade. This may be because of the increase in rural incomes, the spread of digital payment systems and increase in aspirations in the rural communities. That, again, is a good trend but it needs to be sustained.</p>
