Breaking News

India’s Middle Class Struggles with Rising Food Inflation

India's Middle Class Struggles with Rising Food Inflation

India’s urban consumers are cutting back on spending, from snacks to fast food, as persistent inflation pressures middle-class budgets, posing a threat to the country’s economic growth.

Over the past few months, slowing urban spending has impacted major consumer goods companies, sparking concerns about the sustainability of India’s long-term economic progress. Since the pandemic’s end, India’s economic recovery has been largely driven by urban consumption, but that trend is now shifting.

Read more: Human Trafficking in India: Two Women’s Struggle to Escape Abuse and Seek Justice

Nestle India Chairman, Suresh Narayanan, noted that the wealthy continue to spend freely, but the middle class, which has traditionally been a key market for fast-moving consumer goods (FMCG) companies, seems to be shrinking. Nestle reported its first revenue drop since 2020, reflecting this shift.

Though the Indian middle class isn’t officially defined, it’s estimated to comprise about a third of India’s 1.4 billion people, playing a critical role in both the economy and politics. The frustration of this group is seen as a contributing factor in Prime Minister Narendra Modi’s recent electoral challenges.

India’s economy is projected to grow 7.2% in the year ending March 2025, the fastest among major economies, but there are signs of a slowdown in the household sector. According to Citibank, urban consumption fell to a two-year low in October, influenced by factors like reduced wages and tightening loan regulations.

Inflation has been high, with food inflation remaining above 8% due to rising prices of essentials like vegetables and cereals. Retail sales during the 2024 festive season grew at half the pace of last year, reflecting consumer caution. For many, like 60-year-old Rajwanti Dahiya, saving has become a struggle.

Despite this, India’s central bank expects growth to continue, driven by rural demand and government investment. Some economists are less optimistic, anticipating that urban consumption will keep growth below expectations, especially in sectors like FMCG, which have seen declines in sales.

In major cities, consumers are opting for cheaper, unbranded goods, leading to sales drops for companies like Hindustan Unilever. Fast-food chains have also seen declines as diners choose more affordable meals.

Facebook
Twitter
LinkedIn
Pinterest
WhatsApp