Business
Significant per capita income shifts to small town opportunities – what RBI bulletin has to say about household preferences as incomes rise
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There are significant per capita income shifts underway, according to the Reserve Bank of India’s (RBI) bulletin for the month of March 2024. In an article on the “State of Economy”, it is noted that small town opportunities are leading to growth of business across lifestyle segments.
“Market research indicates that the domestic fast moving consumer goods (FMCG) sector may experience moderate growth over the next six months.On the other hand, the demand outlook for premium consumer businesses is robust and the growth rhythm is expected to persist into the medium-term,” the article states. This, the RBI bulletin says, suggests that there are significant per capita income shifts underway.
“Small town opportunities are leading to growth of business across lifestyle segments, with companies that entered these markets enjoying the fruits of being first movers,” it says.
According to the “State of Economy” article, new household consumption expenditure survey (HCES) information shows that per capita spending on durables and discretionary products has been rising in both rural and urban markets. “Real per capita income is up 1.5 times since 2011-12 at a compound annual growth rate of 4 per cent,” it states.
Key facts from the Household Consumption Expenditure Survey (HCES): 2022-23
“Market research indicates that the domestic fast moving consumer goods (FMCG) sector may experience moderate growth over the next six months.On the other hand, the demand outlook for premium consumer businesses is robust and the growth rhythm is expected to persist into the medium-term,” the article states. This, the RBI bulletin says, suggests that there are significant per capita income shifts underway.
“Small town opportunities are leading to growth of business across lifestyle segments, with companies that entered these markets enjoying the fruits of being first movers,” it says.
According to the “State of Economy” article, new household consumption expenditure survey (HCES) information shows that per capita spending on durables and discretionary products has been rising in both rural and urban markets. “Real per capita income is up 1.5 times since 2011-12 at a compound annual growth rate of 4 per cent,” it states.
Key facts from the Household Consumption Expenditure Survey (HCES): 2022-23
- The proportion of monthly per capita consumption expenditure (MPCE) allocated to food items has decreased from 52.9% to 47.5% in rural areas and from 42.6% to 39.7% in urban areas between 2011-12 and 2022-23, notably with cereals experiencing the most significant decline.
- However, within the food category, there has been an increase in the allocation towards high-value food items such as fruits, milk, and prepared meals.
- Overall, the shift in consumption patterns towards non-food items like consumer services, durable goods, and conveyance indicates evolving household preferences in response to rising incomes.
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