Indians are saving more and working longer hours to meet living expenses, says study

• Due to the rising retail inflation, Indian households have been dealing with stressed budgets.
• Savings have taken a hit and most of them put big plans of retirement, insurance and children’s education on hold.
• As per Kantar’s Global Issues Barometer, for 76% of urban consumers, the increasing cost of living and other issues of concern are having an impact on their big life plans.
• Kantar’s report says that compared to the world, Indians feel the pinch of price increase on fuel, food and beverages and household bills.
• However, India is an optimistic country, said the report, and urban consumers are expected to loosen their purse strings come festive season.

Urban consumers are putting less money into their piggy banks as savings have taken a hit due to increasing prices of fuel, food and beverage and massive household bills.

For 76% of urban consumers, the increasing cost of living is having an impact on their big life plans, said Kantar’s Global Issues Barometer.

The report says that people are struggling to meet their living expenses. As many as 35% of consumers said that their household financial situation is deteriorating and 46% of them believe the general economic outlook of the country is negative right now.

“Indian consumers are saying that they are going to reduce the amount of money they're putting into savings, more than their global counterparts, and they are going to work harder than other countries -- even longer hours so that they earn enough money,” Soumya Mohanty MD and chief client officer of insights division at Kantar told Business Insider India.

Retail inflation has taken away the purchasing power of the consumers. To compensate, urban consumers are working harder and rationalizing savings by putting their ‘big plans’ on hold.

“The category that is likely to get impacted is discretionary. Consumers are going to cut back more on the larger outlay items such as cars, durables, and mobile phones. Apart from that, future savings towards children's education or their own retirement is on hold, they're actually prioritizing the ‘here and now’. This is why there’s a growing concern for life plans and cost of living,” said Mohanty.

Prudent but optimistic

Despite being worried about fuel prices and household spendings the most, Indian consumers are also the most optimistic of the lot. They have pinned their hopes on their organizations to give them a better future.

“People are trimming and there is a sense of prudence but they are optimistic about the future. Indian consumers are more likely to believe they'll get higher increments than their global counterparts and that appraisals will beat inflation. So, the economic outlook is sunny, despite the rising prices being felt. Consumers will continue to be cautiously optimistic,” said Mohanty.

Global consumers believe that governments must tackle the financial crisis. Indians however feel that it’s a shared responsibility between government, general public and businesses.

“Indian consumers seem to believe that all of us jointly need to solve the problem, whereas the rest of the world seems to believe that the government has a larger role to play. So in that sense, Indians are more cautiously positive, they are more likely to trust their government, and they believe that things will get better,” said Mohanty.

Festivals are essential in India

With the festive season around the corner and India’s inflation rate easing a bit, consumer sentiment is expected to rise in the coming weeks. Added to that, Indians do not consider festival spending as a ‘luxury’. To them it counts under essentials.

“Consumers have already gone through two years without spending too much. They want to go out now and spend money. Festivals give them an opportunity to do that. So, consumers will loosen their purse strings simply because they are tired, and exhausted. We are not the kind of economy which can hold back,” Mohanty told Business Insider India.