The consumer sentiments of the lower middle class population in the urban and semi urban spaces are buoyant about the economy. The financial well-being index increased from 35 to 39 in terms of current status and from 63 to 66 in terms of future expectations, revealed a latest report by HomeCredit India.
According to the report, 52 per cent of consumers experienced growth in their income in the current year compared to previous year while 74 per cent of consumers expect their income to increase by the coming year.
The average of personal monthly income in 2024 stands at Rs 35k for Metros and Rs 32k for Tier 1 & 2 cities, showing an increase from Rs 33k (Metros), Rs 30k (Tier 1), and Rs 27k (Tier 2) in 2023.
Among Metros and Tier 1 cities, Bangalore, Hyderabad, and Pune emerged as pivotal hubs, offering newer and better prospects for consumers seeking advancement. These cities witness rise in income levels, with Bangalore and Hyderabad leading with incomes 15 per cent and 33 per cent higher than the national average, respectively, the report said.
Additionally, on average, the personal monthly income of lower-middle-class individuals is around Rs 33K, while monthly expenses stand at Rs 19K in 2024. The growth in income over the past year has kept pace with the increase in expenses.
Uptick in Expenses
The report further revealed that household expenses witnessed a notable uptick, with an average increase of 6 per cent. In households with more than one earning member, the chief wage earner (CWE) contributed approximately 80 per cent of the total household expenses, while non-CWE contributed about 20 per cent. In the study, 42 per cent of the women are CWE in their respective households.
Grocery (26 per cent) and Rent (21 per cent) continued to be the primary expenses dominating the wallet share of the average lower-middle-class Indian. This was followed by Commute (19 per cent), Children’s Education (15 per cent), Medical Expenses (7 per cent), Electricity Bills (6 per cent), Cooking Gas (4 per cent), and Mobile Bills (2 per cent).
As for discretionary spends, distinct spending patterns among different demographics could be seen. Chennai lead in local travel/sightseeing (59 per cent), eating outside (54 per cent) and watching movies outside (55 per cent) when compared to other metros, the report said.
Lucknow, on the other hand, is the lowest spender on local travel/sightseeing (17 per cent) and eating outside (14 per cent). Chennai also pays the highest rent (29 per cent), while Kolkata and Jaipur pay the lowest (15 per cent). Ahmedabad and Dehradun spend the least on fitness (1 per cent).
Bengaluru & Kochi spends the most on children’s education (23 per cent). Dehradun tops in medical expenses (13 per cent) but spends the least on children’s education (10 per cent).
The report also indicated that in the last six months, almost 60 per cent of people had purchased fashion products like apparels and accessories, with Gen Z showing a greater inclination towards purchasing fashion products and electronics.
Savings increase among women, genz & millennials
In terms of savings, approximately 60 per cent of consumers prioritise building a cash reserve to address emergency expenses after covering their monthly fixed expenses.
According to the report, Men (62 per cent) outpaced Women (50 per cent) in savings. Similarly, Gen Z (68 per cent) demonstrated a stronger inclination towards savings than Millennials (62 per cent) and Gen X (53 per cent).
Additionally, about two-thirds claim that they would be able to save more (66 per cent) and invest more (66 per cent) in the coming year. This buoyancy in consumer sentiment is fuelled by the upward growth trajectory in the economy, an increase in earning capacity, and a positive perception of income growth, said the report.
Regionally, consumers from the East exhibits higher savings rates (63 per cent) compared to those from the West (61 per cent), South (59 per cent), and North (59 per cent). Furthermore, metros led in savings, with 62 per cent of urban consumers prioritising savings over Tier 1 (61 per cent) and Tier 2 (54 per cent) cities.
