IMPACT OF INFLATION ON CONSUMPTION PATTERN By Debdoot Mukherjee, Forline De Fernanddo.X, Nagaraj P, Sarica.S, Dinesh Varma.M, Eveson Chella, Karin Basha, Parul Mukherjee, R.Jayanandhini, & Pavan IMPACT OF INFLATION ON CONSUMPTION PATTERN Page 1 of 33
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Impact of Inflation on Consumption Pattern Project
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The food grains production has increased at the rate of 2.68 per cent per annum during 1960-
1999 which was mainly because of productivity growth (2.44%).
The share of superior cereals (rice and wheat) in total food grains production has shown an
increasing trend whereas the share of coarse cereals and pulses has shown a declining trend
during the last four decades. The study further reveals that the per capita cereal consumption
showed a declining trend in both the rural as well as in the urban areas. The total per capita
monthly consumption expenditure has increased by about six and seven times in rural and urban
areas, respectively during this period.
However, the expenditure on food items exhibited a declining trend during this period. The food
basket was found to be diversified both in rural and urban areas with higher levels of per capita
consumption expenditure on milk and milk products, fruits and vegetables and meat. A deficit of
about 9 million tonnes of cereals is expected by 2009-10 but by 2029-30, India is expected to
emerge as a surplus nation in cereals production. Pulses show a deficit of about 5 million tonnes
in 2009-10 and quantum of deficit is expected to increase gradually to the extent of about 14
million tonnes by 2029-30. With the estimated food grains production there is no danger to food
security but the estimated production can be achieved mainly through improvement in
productivity. A high rate of increase in productivity calls for a priority in agricultural research
system coupled with more capital investment stressing the development of new production
technologies for main crops and farm products.
IMPACT OF INFLATION ON CONSUMPTION PATTERN Page 11 of 25
7. DATA ANALYSIS
7.1. Primary data
After collecting the primary data from the population of Chennai on the basis of questionnaire filled up by the head of the family. The following results come out.
Graph 1
Joint family Nuclear family0
10
20
30
40
50
60
70
80
26
74
Type of house hold
Type of house hold
Source: Survey data Type of house hold
Analysis: - From this graph we can say that majority of the house hold are nuclear
families.
IMPACT OF INFLATION ON CONSUMPTION PATTERN Page 12 of 25
Graph-2
77%
22%1%
Occupation
Service Business Agriculture Unemployed
Source: Survey data Occupation of the Household
Analysis: - From this graph we came to know that 77% of household are service people.
22% are business people 1% is agriculture. Service household are again categorized into
two type government services and private service 23% of house hold are in government
sector and 54% are in private sector.
Table 1
Particular Assets Percentage
Household assets
Television 100%
Motorcycle/scooter 100%
Four-wheeler vehicle 55%
Owned house 100
Source: Survey data
IMPACT OF INFLATION ON CONSUMPTION PATTERN Page 13 of 25
Analysis: - From this table we come to know that majority of the income group has all
the main house hold assets only the Lower income group do not afford to have
four – wheeler vehicle.
Graph 3
310
20
67
What is your household income per month
below 50005000-1000010000-20000above 20000
Source: Survey data Analysis: - From the above graph we come to know that 67% of the incomes of house
hold lies above 20000 per month. Whereas 20% lies between 10000-20000per month,
and 10 % lies between 5000-10000per month. Income group only 3 % lies below 5000
IMPACT OF INFLATION ON CONSUMPTION PATTERN Page 14 of 25
Source: Survey data
Analysis: - From the above Table we come to know that all the house hold income
group consume all the basic commodities for their daily use.
Graph 4
Before Inflation After inflation
Rice 30 38
Wheat 25 34
Pulses 65 78
Oil 62 75
Sugar 35 40
5
15
25
35
45
55
65
75
85
3038
2534
65
78
62
75
3540
RiceWheatPulsesOilSugar
An Average Household Spend on Monthly Commodities* (in terms of money)
Source: Survey data * Rs per Kg
Graph 5
IMPACT OF INFLATION ON CONSUMPTION PATTERN Page 15 of 25
Before Inflation After inflation
Rice 21 21
Wheat 5 5
Pulses 4 4
Oil 4 4
Sugar 3 3
2.5
7.5
12.5
17.5
22.5 21 21
5 54 44 43 3
RiceWheatPulsesOilSugar
An Average Household Spend on Monthly Commodities* (in terms of Kg )
Source: Survey data
Analysis: - From the above graph no 4 & 5 we came to know that there is a huge change
in price of commodity but the consumption pattern did not change. They have adapted to
the change in price of commodity. The average number of house hold consume same
amount of commodities that they use to consume before inflation.
Table 3
PARTICULAR ITEMS CONSUME
LOWER INCOME GROUP MIDDLE INCOME GROUP
How frequently did an
average family consume
the following items?
Vegetables Daily Daily
Milk Daily Daily
Fruits Weekly Daily
Eggs Weekly Daily
Meat / Fish Weekly Weekly
Source: Survey data Consumption Pattern of Selected Commodities
Analysis :- From the above table 3 we came to know that middle income group consume
all the secondary item in a daily manner except meat and fish whereas the lower income
group consume vegetable and milk in daily manner and rest in weekly manner.
Graph 5
IMPACT OF INFLATION ON CONSUMPTION PATTERN Page 16 of 2592
8
Did increase in food price affect your monthly saving
YesNo
Source: Survey data Change In Savings
Analysis :- From the above Graph 5 we came to know that yes there is a change in monthly saving in all the income group.
Graph 6
97
3
Does everyone in your household get at least three meals a day throughout the year
YesNo
Source: Survey data Household Get At Least Three Meals
A Day throughout the Year
Analysis: - From the above Graph 6 we came to know that yes the average house hold gets the three meals a day throughout the year.
Graph 7
IMPACT OF INFLATION ON CONSUMPTION PATTERN Page 17 of 2582
3.2
Does your household have a Ration Card
YesNo
Source: Survey data Ration In House Hold
Analysis:- From the above Graph 7 we came to know that majority of the household have a ration card
Graph 8
27
73
Do you use ration card to get monthly com
YesNo
Source: Survey data Use of ration card
Analysis :- From the above Graph 7 we came to know that majority of the house hold do not use the ration card as because they do not get anything from the ration. And even if they get something the quality of the commodities is not up to the mark.
IMPACT OF INFLATION ON CONSUMPTION PATTERN Page 18 of 25
7.2. INFLATION GRAPH
Graph 9
JAN-08
MAR-08
MAY-08
JULY-
08
SEPT-0
8
NOV-08
JAN-09
MAR-09
MAY-09
JULY-
09
SEPT-0
9
NOV-09
JAN-10
MAR-10
MAY-10
JULY-
10
SEPT-1
0
NOV-10
JAN-11
MAR-11
MAY-11
JULY-
11
SEPT-1
1
NOV-11
JAN-12
0
2
4
6
8
10
12
14
16
18
Inflation Graph
RATE
Source: - NSSO Graph For Inflation From Jan - 2008 To Feb-2012
Analysis :- From the above graph 9 (source from NSSO website) we came to know that the
inflation start from the month of Jan 2008 and it was in the peak at the period for 14 months
IMPACT OF INFLATION ON CONSUMPTION PATTERN Page 19 of 25
from march 2009 to May 2010. Then after the inflation come down to 7.57% which continues till
now.
8. ESTIMATED IMPACT OF INFLATION ON CONSUMPTION PATTERN
8.1. WHO ARE AT RISK?
After conducting the study we come to know about the consumption pattern of the house hold
and from that we conclude that middle class house hold has adapt in live hood as an when price
change due to inflation. There is no change in their consumption pattern but there was a vast
change in saving pattern the middle class family can save more as because of the rise in
commodities prices.
Whereas the lower income group is concern the scenario is very bad . Due to
increase in the price of basic commodities they are facing very difficult time. As there did not get
basic commodities in ration and even if they get the basic commodities in ration the quality is
very bad to consume. Most of the lower class people do not have ration card in there house. So in
our opinion the lower income group are in risk of inflation.
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9. FINDINGS & CONCLUSION
9.1. Findings
1. Most of the household consumes all the commodities all the commodities like rice
wheat etc. but there is variation in their quantity.
2. The quantities consumed by middle class families before inflation and after inflation
is the same but for the lower income group price as well as consumption pattern has
changed.
3. Monthly saving gets affected for the majorities of the income group due to increase in
rate of food prices.
4. Majorities of the middle income group have ration card but lower income group does
not hold a ration card
5. Only 27% use ration card for purchase monthly commodities because it does not
fetch them quality food .
9.2. Conclusion
From the above information gathered we came to conclude that the consumption pattern
of middle income group has not changed much even through there is inflation but there is
a little change in saving pattern. Lower income group has a major problem in
consumption & saving pattern due to increase in the rate of inflation.
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IMPACT OF INFLATION IN CONSUMPTION PATTEN
Name of respondent: /_______________________________/ Date: /_________________
Respondent's DetailsAge (years): Gender: Education level: Marital Status
Household DetailsNumber of household members:
Type of household Main occupation(s) of the household:
Household assets
Joint family
Nuclear family
Service
Govt
Private
Business
Agriculture
Unemployed
Television Motorcycle/scooter Four-wheel vehicle Owned house
1. What is your household income?a. Below 5000b. 5000 - 10,000 c. 10,000 – 20,000d. Above 20,000
2. Can you tell us what commodities you buy for daily consumption?
Rice Wheat/atta Pulses Pulses (type 2)
Oil (type 1) Oil (type 2) Sugar Other
3. In an ordinary month, how much commodities do you normally consume?
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Rice Wheat/atta Pulses Pulses (type 2)
Oil (type 1) Oil (type 2) Sugar Other
4. How much amount do you spend on monthly commodities?
COMMODITIES BEFORE INFLATION AFTER INFLATIONQuantity Amount Quantity Amount
5. How frequently did your family consume the following items?
Vegetables Milk Fruits Eggs Meat or fishDailyWeekly
6. Does everyone in your household get at least three meals a day throughout the year?
Yes:- No:-
7. Has it ever happened, during the last three months that some people in the household had to skip a meal or sleep hungry because there was not enough grain in the house?
Yes: - No:-
8. Does your household have a Ration Card?
Yes:- No:-
9. Do you use ration card to get monthly commodities?Yes:- No:-
10. Suggestion (if any)
IMPACT OF INFLATION ON CONSUMPTION PATTERN Page 23 of 25
1. Study of impact of food inflation on middle class consumer’s household consumption of milk with reference to Thane city Dr. S. B. Kishor1al and Dinesh Gabhane
2. Food and prices in India: impact of rising food prices on welfare by Nathalie Pons Centre De Sciences Humaines (Delhi)
3. Wikipedia (about inflation )
4. NSSO website for secondary data about inflation
5. Department of Commerce and Science website (Govt of India )
6. Family and welfare website (Govt of India ).
IMPACT OF INFLATION ON CONSUMPTION PATTERN Page 24 of 25
11. APPENDIX
1. ITM Institute for Technology And Management2. NSSO National Survey And Statistics Organization3. FPI Food Price Index4. GDP Gross Domestic Product5. FCI Food Corporation Of India6. WPI Wholesale Price Index7. CPI Consumer Price Index
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