Inflation impacts Middle Class Consumer severely!

By Arun Prabhudesai Last updated Sep 24, 2014

Inflation is probably the biggest bottleneck that is facing India and its Economic Future. The high rate of inflation has remained untamed for quite a few months now and it has taken serious toll on Aam Aadmi.

One of the biggest reasons for inflation currently is the higher fuel prices. In last 12 months alone, the fuel prices have gone up by as much as 25 percent – And when fuel prices go up, everything is affected.

ASSOCHAM recently released findings on how Inflation has affected spending of Indians and some of the findings are quite startling.

The survey finds that Middle Class consumers across the country have slashed their spending’s on entertainment, shopping and eating out by 65 per cent to manage their limited monthly budgets. The Middle Income group consumers used to spend about 5000 to 6000 rupees monthly before the high inflation set in – But, now they spend about Rs. 2,800 – nearly 65% cut from earlier.

However on the other hand, High Income group seems to have been least affected – as there is nearly no change in their spending habits. On average HIG was spending about Rs. 20,000 p.m earlier and even now the spending remains the same.

The ASSOCHAM survey was conducted in a period of three months beginning January to March 2011 in major places like Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Hyderabad, Pune, Chandigarh etc. A little over 500 employee were selected from each city on an average. Delhi ranks first in curtailing their expenses followed by Ahmedabad (2^nd) Chandigarh (3^rd), Mumbai (4^th) and Chennai (5^th).

Here are some of the other findings of ASSOCHAM report

Nearly half (49.5 percent) of MIG either avoid shopping altogether or shop only for those things that are absolutely needed
34 percent said that their shopping has been restricted to only necessities
75 percent of MIG have cut back on everyday expenses by packing their lunch, car-pooling, cutting down on gas and electricity use.
69 percent of MIG have revealed decreased spending on eating out.
55 percent reported decrease in the amount they spend on clothing.
54 percent indicated fall in the amount they spend on vacations.
49 percent plan have decreased the amount they spend on home appliances; 44 percent for home and personal electronics; 42 percent for automobiles; and 35 percent for real estate.

The biggest thought that comes to my mind after seeing these survey findings – If middle class people are suffering so much due to Inflation, what about poor and BPL citizens. Imagine the hardships they must be going through just to ensure that their family is fed 2 times a day.