NEW DELHI: High food prices and education costs, coupled with a gloomy job market, mean that consumer spending in India this holiday season will be significantly down on last year, according to a new survey.
Industry organisation Assocham surveyed 1,650 people in nine major cities to establish their spending intentions in the coming holiday season and found that middle and lower income families were likely to spend 43% less this year.
Over half (56%) of respondents pointed to rising food costs as a reason for cutting back – monthly grocery bills have jumped 50% over the past two years – while 21% said the value of their savings had gone down. Some 15% indicated they were saving for a big purchase and around 8% noted that EMIs (equated monthly instalment payments) had increased.
The effects will be felt most in Delhi, where two thirds of respondents cited increasing living costs and shrinking salary packages as factors that would limit their enjoyment of this year's festive season.
Delhi was followed, in order, by Ahmedabad, Mumbai, Chandigarh, Kolkata and Chennai.
Rural demand has also fallen, according to DS Rawat, Assocham secretary-general, a consequence of the poor monsoon and lower incomes.
Straitened economic circumstances mean that festive offers will be an even more important tactic for retailers; some 54% of survey respondents indicated they would only buy items on sale or discount, preferably with 50% off.
Sweets and food items (90%), clothes (86%), and gifts (53%) were the top three purchases being planned, but a significant proportion (42%) were also looking to buy big-ticket items such as mobiles, digital products, home appliances, electronics or automobiles.
Consumers in the mega metros are more likely to make such purchases, as are younger consumers. Six in ten (59%) of respondents aged 25 to 34 years expected to buy mobile phones, for example, compared to five in ten (48%) of those aged 35 to 45 years.
Data sourced from Assocham; additional content by Warc staff