Shoppers Scrutinize Spending as Inflation Impacts Consumer Behavior

MUMBAI: Indian consumers are tightening their belts as rising prices and inflation take a toll on spending habits. With the festive season underway, many are cutting back on non-essential purchases and impulse buys. Industry executives report that entry-level shoppers are particularly affected, with households prioritizing necessities over discretionary spending.

Umesh Kumar Agarwal, director at Haldiram Marketing, noted that the impact of price increases is evident, especially in mass markets and rural areas. Anupam Bansal, executive director at Liberty Shoes, added that while consumers are not completely halting purchases, they are postponing decisions, leading to a noticeable decline in impulse buying.

Pressure Building Up

Data indicates that consumer pressure has been mounting since the beginning of the year, largely due to disruptions in energy supplies caused by the ongoing war. A recent study by Worldpanel by Numerator revealed a 1% decline in overall grocery spending during the March quarter, with rural households experiencing a sharper drop of 5%. Urban expenditure also fell by 4% year-on-year, contrasting sharply with a 14% growth in the previous year.

Manoj Menon, director of the commercial worldpanel division, stated that while essentials remain a priority, discretionary purchases are facing increased scrutiny. Rising EMI payments are further constraining disposable income. NielsenIQ’s June quarter report showed that 68% of FMCG categories experienced a decline in volumes, with significant drops in products like washing liquids and toilet soaps. Overall volumes fell by 2% during the quarter.

Analysts at NielsenIQ noted that rising input costs have affected price points across various categories. Companies in the FMCG and durables sectors have implemented multiple price hikes to address commodity inflation. Jayatheertha Chary, managing director at Mother Dairy, confirmed that input costs remain under inflationary pressure, while Mayank Shah, chief marketing officer at Parle Products, emphasized a focus on affordability and distribution over further price increases.

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