High petrol, diesel prices made people spend less on healthcare, other discretionary items

The consistent rise in petrol and diesel prices has been a cause of concern for the last few months and its impact can now be seen on consumer spending. According to a recent report by State Bank of India (SBI), rise in fuel prices has led to crowding out on other expenses like health. The economic wing of SBI analysed card spends which indicated that expenditure on non-discretionary health has been reduced substantially in order to accommodate increased expenditure on fuel.

“In fact such spending has more than crowded out the spending on other non-discretionary items, like grocery and utility services to such an extent that the demand for such products has significantly declined,” Dr Soumya Kanti Ghosh, group chief economic adviser at SBI said in a note. This trend seen in the earlier months of this year can be worrisome going forward. Apart from this, Ghosh highlighted that “the share of non discretionary spend on items like fuel has jumped to 75 per cent in June 2021 from 62 per cent in March 2021.” During April- May last year, the share for non-discretionary expenses had reached 84 per cent.