Summary of this article
A recent study captures the mood of Indian households that has been building steadily over the last three years: families trying to stretch every rupee while prices continue to climb. Amid rising living costs, essentials remain non-negotiable, but everything else is up for reconsideration.
Household budgets in India are under increasing strain, with close to 60 per cent of families saying they are finding it difficult to manage their monthly expenses due to rising living costs. According to the latest Kharcha 3.0 study by Worldpanel India, average quarterly spending of Indian families has jumped to Rs 56,135 in March 2025, up from around Rs 42,000 three years ago.
The rise, about 33 per cent over that period, has been driven mainly by higher costs of essentials. Income growth, however, has not kept pace with rising living costs. The study, which surveyed about 6,000 households across India, found that 58 per cent families reported struggling to balance their spending.
A year ago, that number stood at 38 per cent. Only 17 per cent of households said they felt financially comfortable, while the rest said they were “managing somehow.”
Rural, Lower-Income Families Hardest Hit
The sharpest jump has been in rural and lower-income homes, where average spending rose 18 per cent in the past year. But even in cities, where higher-income families typically have more cushion, quarterly expenses are now close to Rs 74,000, up from about Rs 53,000 in 2022. Rural families are spending nearly Rs 47,000, compared to Rs 36,000 three years ago, the study said.
“This is a pivotal moment for both consumers and businesses. With rising expenses across both urban and rural segments and most families prioritising essentials, savings, and debt repayment, consumers are becoming increasingly cautious in their choices,” said K Ramakrishnan, managing director, South Asia, Worldpanel.
How Are People Coping With Rising Costs
Around 80 per cent of respondents said they were restricting purchases to essential groceries. Many admitted they had cut back on impulse buys, moved to cheaper brands, or postponed discretionary spending.
Education and debt repayment, however, are ranking higher, while non-essential items and premium products are losing ground.
Sentiment among the consumers has weakened as well. The Reserve Bank of India’s (RBI’s) Consumer Confidence Index was at 95.40 in May, which is below the neutral mark of 100 that separates optimism from pessimism. Nearly six in 10 families said they believe their financial situation could worsen in the next three months, while just over one in 10 expect any improvement, the survey said.
Another report recently covered by Outlook Money also noted that living costs are outpacing salary growth in India and the working middle class is feeling the squeeze.
How Are People Spending Extra Income
The Worldpanel survey also asked households what they would do with their extra income. More than half said they would save it, 38 per cent would use it for basic needs, and only a small fraction, around 7 per cent, say they would consider spending on luxury or premium goods.
The study only highlighted a mood that has been building steadily over the last three years: families trying to stretch every rupee while prices continue to climb. Essentials remain non-negotiable, but everything else is now up for reconsideration.
