Majority of consumers experience salary increases and improved savings rates
Economic recovery gains momentum as 52% of consumers report salary increases, with 60% managing to save.
image for illustrative purpose
Recent economic data reveals encouraging trends for consumers, with 52% of individuals reporting a salary increase over the past year. This positive shift in income has had a cascading effect on financial stability, with 60% of consumers now able to save money after covering their expenses.
Consumer sentiments among the lower middle-class populations in urban and semi-urban areas are notably optimistic, as reflected in the Home Credit India report. The financial well-being index rose from 35 to 39 for current status and from 63 to 66 for future expectations. The average personal monthly income in 2024 is Rs 35,000 for metros and Rs 32,000 for Tier 1 and Tier 2 cities, up from Rs 33,000 and Rs 30,000 to Rs 27,000 respectively in 2023.
The report highlighted that major cities like Bangalore, Hyderabad, and Pune are leading in income growth, with Bangalore and Hyderabad showing incomes 15% and 33% higher than the national average, respectively. On average, lower-middle-class individuals earn around Rs 33,000 monthly while spending Rs 19,000. Household expenses rose by 6%, with groceries and rent being the primary expenses. Chennai tops in spending on local travel and dining out, while Lucknow spends the least. Variations in discretionary spending and major expense categories were also noted across different cities.
In terms of savings, 60% of consumers are focusing on building cash reserves after covering fixed expenses, with men (62%) saving more than women (50%). Gen Z shows a higher propensity to save (68%) compared to Millennials (62%) and Gen X (53%). The East region leads in savings rates (63%), followed by the West (61%), South (59%), and North (59%). Urban consumers in metros prioritise savings more than those in Tier 1 and Tier 2 cities, reflecting a positive economic outlook and increased earning capacity.
As businesses continue to adapt and compete in a changing economic landscape, these trends may further solidify, leading to sustained consumer confidence and economic stability. However, addressing the disparities in wage growth and managing inflationary pressures will be crucial for maintaining this positive momentum.
