India's consumer spending patterns are changing, and not in a way you’d expect. Despite rising incomes and aspirations, people with discretionary income are tightening their wallets, wary of price hikes that defy logic.
Wisdom Hatch founder Akshat Shrivastava laid bare this dilemma in a post on X.
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"I bought a 409-litre Beko refrigerator for 1,100 AED (around ₹25,000) in Dubai," he wrote. But when he looked for a similar model in Goa, the price shot up to ₹38,000—an increase of almost 50%.
"It is strange that our country considers a fridge a ‘luxury’ and taxes the hell out of it," he added.
This story isn’t just about refrigerators; it’s a symptom of a larger issue. With slower GDP growth and from September 2024 to January 2025, benchmark indices (Sensex and Nifty) taking up to 12% hit from their all-time highs, the ripple effects are being felt across industries.
A recent research by UBS Group suggests India’s economy is grappling with structural slowdowns, including credit moderation, weakening foreign direct investment (FDI), and declining export competitiveness.
The consumer staples sector, once a defensive stronghold, is showing signs of strain. Manik Narain, UBS’s head of EM strategy research, was quoted in a Bloomberg report: "Earnings moderation is spreading, signaling deeper, systemic challenges."
Add to this the increasing costs for everyday goods, from home appliances to basic commodities, and the purchasing power of even affluent households is taking a hit. For Indian consumers, this means recalibrating their spending habits, particularly on what’s deemed “luxury” by tax regulations. Meanwhile, policymakers face an uphill battle as rising global treasury yields and a weakened rupee limit their ability to provide relief through monetary easing.
As Shrivastava points out, if essential appliances are treated like luxuries, the question isn't why consumers are spending less—it’s how long this trend will last.