Consumers cut spending on clothing, fuel, gadgets as inflation eats into budget: Survey

Urban Indian households reduced expenditure on fuel, clothing and accessories, eating out, and gadgets, among other things, in the last six months as rising inflation raised the cost of living, eating into their budgets, showed a YouGov survey.

The survey covering 1,013 urban respondents reveals that the multi-year high inflation is pinching a majority of urban Indians with their cost of living going up compared to last year. While nearly half of the respondents said their cost of living went up a lot, 31 percent said it went up a little.

Source: YouGov

"Residents in tier-1 cities are more likely to feel a greater impact on their cost of living with half of them claiming their cost of living has gone up a lot, as compared to 44 percent and 43 percent of residents in tier-2 and tier-3 cities who said the same about their situation," said the survey report.

Among cutbacks, clothing tops the list with more than a third (35 percent) saying they have reduced spending on clothes and accessories. Almost as many (31 percent) have cut down expenditure on hobbies or leisure activities like going to the cinema.

Source: YouGov

Twenty-nine percent of respondents said that they cut their expenses on petrol or diesel with the recent hike in fuel prices while 28 percent cut down on eating out at food and beverage outlets.

While over a fifth have reduced spending on services like grooming & wellness, nearly a quarter have cut down expenses on streaming services, which is more noticeable in tier 1 cities, according to the survey report.

The wholesale price-based inflation touched a record high of 15.88 percent in May mainly due to higher food and crude oil prices. The retail inflation based on Consumer Price Index hit an eight-year high of 7.79 percent in April while it was 7.04 percent in May.

However, despite the cost of living increasing, most households feel their financial situation has either improved or remained unchanged.

Source: YouGov

Going forward, nearly 40 percent of respondents expect their household situation to improve while 32 percent expect no change. Only 17 percent think their household situation will become worse.

Meanwhile, Reserve Bank of India deputy governor Michael Patra said on Friday: "It may be a premature prognosis at this time, but there are indications inflation is peaking."