Home / Industry / Retail /  Rural consumers buy fewer essentials due to inflation

NEW DELHI : With inflation hurting household budgets, rural India is buying less items of daily use. The rural markets witnessed a 5% decline in monthly purchases of essential items, including cooking oils, laundry products, biscuits and chocolates, besides personal hygiene products such as toilet soaps, said the Rural Barometer Report from research firm Kantar and GroupM’s Dialogue Factory released on Thursday.

The decline was reported between December 2021 and July 2022. Across product categories, a larger number of rural consumers are also buying small packs of brands to maintain household budgets, rather than shifting to lower-priced brands, the report added.

The study involved over 4,000 consumers from villages in the age group of 18 to over 55 years. An overwhelming 70% of the participants flagged inflation concerns, and its impact on their financial condition. Among those who admitted to being worried about their finances were skilled and unskilled workers, and small businesses owners such as traders and shopkeepers. Though those engaged in agriculture were less concerned about their financial situation, they were less confident about the country’s economic health, the report said.

To be sure, Mint had reported that demand for fast-moving consumer goods (FMCG) products in rural areas was lower than urban India in the June quarter with volumes dipping 2.4%, as per a report by researcher Nielsen IQ. In an interview in early September, Kantar said that rural consumers were moving to smaller packs to cut back on spending.

FMCG firm Wipro Consumer Care, the maker of Santoor soaps, had admitted that demand for small packs was higher in rural areas than urban markets. Even though inflation is stabilizing and demand improved marginally in the September quarter, below-average monsoon in Bihar, Uttar Pradesh and Bengal may result in declining demand, the company had said.

The Rural Barometer report said that people from northern India and West Bengal had lower confidence in the Indian economy, while the South, barring Karnataka, had greater faith in the resilience of the economy.

Dalveer Singh, head of experiential marketing, Asia-Pacific, Dialogue Factory, said inflation worries are trickling across rural markets and the impact was seen in dwindling consumer confidence in the first half of 2022.

However, Tamil Nadu, Andhra Pradesh and Telangana had more confidence in the economy, whereas north India and West Bengal were not so optimistic. “Big-ticket expenditure in the last six months has been stagnant or declining. Conversely, construction categories are continuously witnessing an increase in spending in rural India…", he added.

The survey participants, however, said that while monthly household expenditure rose by 8%, monthly household income has gone up by 12% during the same period, somewhat offsetting the effects of inflation. According to Puneet Avasthi, senior executive director, specialist businesses, insights division, Kantar, inflation concerns were affecting two out of three rural Indian households. However, he said that since household incomes have grown at a faster rate than inflation, it has created some stability. Consumers are looking to move to small pack sizes and may also be doing portion control to make the pack last longer, Avasthi added.

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

×
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout