Households spend marginally more on food items in 2023-24

CONSEQUENTLY, THE SHARE of non-food items in rural areas, MPCE has declined to 52.96% in 2023-24 from 53.62% in 2022-23; and in urban areas to 60.32% from 60.83%.

Meanwhile, the survey showed that the urban-rural gap in MPCE has declined to 71% in 2022-23 from 84% in 2011-12. It has further come down to 70% in 2023-24 that confirms sustained momentum of consumption growth in rural areas, the statistics ministry said in a release.

Increased spending on food items by households is a direct consequence of high food inflation, said Indranil Pan, chief economist, Yes Bank. But less spending on discretionary items also shows a decline in consumption, partly due to low real-wage growth this year, Pan added.

Former Reserve Bank of India (RBI) governor Shaktikanta Das had stated in the latest MPC minutes that lower inflation will enhance disposable income with households and increase their purchasing power. Such an approach would support consumption and investment demand, he said.

In August 2023-July 2024, the reference period of the HCES 2023-24, food inflation averaged 8.3% against 6% in the same period of last year, whereas CPI inflation during the period averaged 5.1% against 6.1% in August 2022-July 2023.

The survey revealed that, in nominal prices, the average MPCE (without imputation) in 2023-24 increases by about 10% in rural areas to ₹4,247 and 8% in urban areas to ₹7,078 from the level of 2022-23.