Indian consumer spending patterns alter

Warc, 21 May 2014

NEW DELHI: Over the past five years, urban India's consumption patterns have changed and are gradually converging with global trends according to a new report which charts a greater share of spending going on education and commuting.

The Wallet Monitor study from market researcher IMRB International surveyed 30,000 households across 196 cities in 18 states and found that the proportion of their monthly budget going to education had risen significantly, from 7% in 2008 to 10% in 2010 and 15% in 2013.

Other categories that registered a growing share of household expenditure were commuting, up from 9% to 11% between 2010 and 2013, and household products, up from 5% to 6%, Livemint reported.

The flip side of the coin was represented by a declining share for food, which in 2013 took 40% of the budget, down from 42% in 2010 and 44% in 2008. This development comes even as food prices have been rising sharply in recent months – 13% in the year to end March – indicating that food spending is likely to be rising in absolute terms even if its overall share is not.

"In India, the expenditure on groceries is still the largest, but its share of total spend has been coming down over the years," said Hemant Mehta, senior vice-president at IMRB. In this respect, he added, "we are emulating the West".

His colleague Deepa Mathew, who conducted the survey, also highlighted the rise of "affordable indulgence". One example of this was the reaction to the cost of eating out; while almost half households had eaten out at least once a week in 2010, three years alter this had fallen to one third.

"Urban India retaliates by bringing the eating-out experience to kitchens," said Mathew. "There's an increased consumption of ready-to-eat and convenience foods with incidence of consumption rising to 23% from 13% in 2010."

But despite the willingness to treat themselves, urban Indian middle-class households were saving more than ever – 10% of income in 2013, compared with 9% in 2010.

"The Indian consumer has got the best of both worlds," observed Mehta. "His spending pattern is more akin to his Western counterpart, but unlike him he continues with his habit of saving."

Data sourced from Livemint; additional content by Warc staff