PremiumFuel costs were the biggest villain when it came to disrupting household budgets in 2021, the latest YouGov-Mint-CPR Millennial Survey has found. While high-earners got the hikes they needed to afford the inflation, those who were already earning less lost pay further
High inflation due to supply-side pressures was one of the biggest pain points of 2021 across the world. In India, expensive vehicle fuel also got into the mix, with petrol and diesel crossing ₹100/litre in several cities. Households bore the brunt as wallets came under stress. As many as 76% of urban Indians feel their household expenses increased in 2021, a sharp rise from 57% in 2020, the latest YouGov-Mint-CPR Millennial Survey has found.
Various expense heads, including essential ones, came under pressure. Most people reported increased expenses across groceries, utility bills, transportation and healthcare. Each category got substantially dearer in 2021 than in 2020. Fuel costs rose for 75% respondents, more than any other item.
No wonder then, when asked to rank expenses based on how much they pinched their budgets, fuel turned out to be the worst villain. But the impact varied by one’s income level. A lower monthly income made one more likely to struggle to pay essential bills, whereas richer groups were more likely to be pinched by rising medical expenses and costs of luxury and consumption goods.
The latest round of the biannual survey covered 12,900 respondents across 206 cities during November-December 2021. It was the seventh such survey conducted jointly by the Indian arm of the global market research firm YouGov, Mint, and the Delhi-based Centre for Policy Research (CPR). Roughly 45% of the sample were millennials, one-third post-millennials (aged 18-24), and the rest pre-millennials (40+).
Income no solace
Ahead of Budget 2022 next week, the survey findings show a disturbing glimpse of how the first and second wave of covid-19 have left behind a long trail of income and inflation pressures on Indian households.
Almost 60% respondents attributed their swelling budgets to an increase in cost of living. But another reason behind the crisis could be income reshuffle—and its gross inequality. People who already earned less were a lot more likely to lose pay further last year. On the contrary, nearly half of those in high-income groups saw pay hikes, while the same was true for just 29% of those in the lowest income category.
Further, a sizable minority of respondents in all income brackets—around 40%—reported no change in their monthly earnings.
This shows how the poorest in India’s income pyramid were hit particularly hard by inflation. Although the employment numbers have improved since the first lockdown, the distress has not fully gone, and remains unequal.
Financial woes
Most of those polled (81%) claimed they had faced some or the other financial difficulty in 2021, and the primary explanation can be traced back to inflationary pressures. The less one earned, the greater the chance of facing financial difficulty.
The biggest casualty of this inflation headache was the ability to maintain one’s planned savings and investments, with 44% of the 7,869 working respondents saying they faced difficulty doing so. Since savings are a hedge against future crises, the impact on households’ spending power could outlast 2021 unless incomes increase substantially.
There’s hardly any silver lining there: while two in three respondents do expect an increase in income in the coming year, low-earners are more likely to expect income to decrease (12%) than high-earners (6%). Worse, the income insecurity is set to perpetuate longer: 84% of those whose earnings increased in 2021 expect it to rise further in 2022, but among those whose incomes declined, just 47% expect a hike.
Purchasing power
The pandemic has taken away the appetite to make big-ticket purchases such as property or a car. While 22% respondents planned to buy a house within a year of the 2019 survey, the share dropped to 15% in 2020 and improved only marginally to 16% in late 2021. For cars, the share was 30% in 2019, followed by 21% and 22%. The appetite for a two-wheeler has not changed much.
The new work-and-study-from-home reality has shifted the focus to electronic purchases. One in every three persons surveyed plans to buy a gadget or a laptop in the coming year. Purchases of other consumer durables are expected to be limited, similar to 2020.
The hints of inequality in how Indians perceive inflation pose a challenge for policymakers as they wade through the lasting household distress left by the pandemic.
This is the fourth of a five-part data journalism series based on the biannual YouGov-Mint-CPR Millennial Survey. The concluding part will appear on 9 February.
The first part focused on the great churn in the job market last year, the second part looked at the rising trend of investing among young Indians, and the third part explored the political partisanism seeping into urban India.
