Inflation 2024: Here’s how rising prices could affect your lifestyle

Price rises are a reality, and they affect all spheres of life—from daily expenses to monthly household budgets. Inflation or price rises in recent years have remained a cause of concern for the common man.

The inflation rate is an indicator of how much more expensive some goods or services have become over a particular period of time. Usually, when the government releases inflation numbers periodically, they fail to catch the attention of the common people. Inflation primarily remains a talking point for economists, policymakers, or media houses, but not for households.

Households start feeling the pinch only when they realise that their monthly budgets have gone haywire and they are shelling out more money to cover the same old essential needs. That’s when inflation begins to be seen as a problem.

Indian families have been grappling with inflation since coming out of the Covid-19 pandemic. Disruptions in global supply chains, a rise in crude oil prices due to geopolitical tensions, and an increase in overall demand for goods and services have been fuelling a rise in prices across the country.

For the past couple of years, India’s retail inflation has stayed above the 4% target. The last time it was close to this mark was in January 2021, when consumer price index (CPI)-based inflation stood at 4.06%. Since then, it has moved in the range of 4.5-7.5%. The latest data by the Ministry of Statistics and Programme Implementation (MoSPI) showed that retail inflation in June 2024 jumped to 5.08% from 4.75% in May 2024.

Finance minister Nirmala Sitharaman didn’t discuss inflation in her Union Budget 2024-25 speech, except saying that it is “moving towards the 4% target.” But rising prices are burning a hole in consumers’ pockets. Rising inflation could be a major cause of forcing many people to make adjustments to their lifestyles to bring down routine expenses.

From education to homes, travel to food, financial investments to non-financial assets, everything has become expensive.

Let’s try to understand how rising prices in 2024 are affecting the lifestyles of common households in India.

Impact of inflation

Rising rentals

A painful increase in housing rentals and home prices has proven to be a new challenge for those whose income levels are not rising at the same pace. The end of the work-from-home culture and the demand for bigger spaces are driving up real estate prices. People are paying a big chunk of their income either towards paying rent or paying EMIs for their home loans, leaving them with a smaller-than-desired portion of disposable income to spend and save.

Rising debt levels

Disposable incomes are down, savings are down, and debt is up. Consumers are using credit cards and taking loans to pay for electronics, travel, and even apparel. This is seen as one of the most worrisome trends brought on by the effects of inflation.

Rising food prices

Prices for all kinds of food items have seen rapid acceleration in the past few months. From staple food to packaged food, rising costs are being passed on to consumers in many forms. Prices of essential food items like rice, pulses, edible oils and vegetables have spiralled in the past few months. The recent rise in tomato prices up to ₹120-150 per kilogram in many parts of the country is a stark reality of rising inflation.

Retail

Consumer retail behaviour has seen a mixed trend over the past few years. While the rising wealth gap in the country has seen a boom in luxury retail on the one hand, discretionary spending among the middle and lower classes has taken a hit on the other. Middle—and low-income consumers are looking for more affordable and low-cost retailers, turning to private-label brands to save money and hunting for the best deals to minimise the impact of rising prices as much as possible.

Travel

Discussions on lifestyle are incomplete without travel. The high inflation scenario has increased the operational cost of travel for every section of society. But the post-COVID boost has kept the sector going as families rush to take holidays despite higher expenditures. The travel industry in India has smartly worked to accommodate families with all kinds of budgets, cashing in on the country's tourism boom. However, many could be cutting down on other costs to meet their travel or vacation expenses.

Rising prices have significantly altered the lifestyles of Indian families in 2024, but what has been more drastic is a shift in priorities that can have an equal, if not greater, impact on consumption patterns going forward.