Inflation Influences Household Spending on Food in India: A Closer Look at Monetary Policy and RBI Rates

Thursday, 5 September 2024, 07:10

Inflation has drastically shifted household spending patterns in India, with recent data revealing an unprecedented decline in food expenditure. According to the EAC-PM paper, current monetary policies and RBI rates play a significant role in shaping these trends. The study highlights notable changes in food consumption across urban and rural areas, underscoring broader economic implications.
Indiatimes
Inflation Influences Household Spending on Food in India: A Closer Look at Monetary Policy and RBI Rates

Inflation's Effect on Household Spending

According to the recent Economic Advisory Council to the Prime Minister (EAC-PM) working paper, average household expenditure on food in India has fallen below half for the first time since 1947. This significant change, attributed to rising inflation and evolving monetary policies, reflects a pivotal shift in consumer behavior across both urban and rural demographics.

Key Findings on Food Consumption

  • The analysis reveals a substantial drop in food expenditure as a proportion of total household spending.
  • Notably, this trend is observed across various states and union territories (UTs).
  • Food spending has dramatically declined in the bottom 20% of households, indicating a significant impact on the most vulnerable populations.

Policy Implications and Economic Trends

The findings suggest that government initiatives, including food security policies, have effectively impacted food consumption patterns. The paper emphasizes that the RBI rates and prevailing economic conditions are critical in understanding these shifts.


This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.


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