Middle and lower income families are likely to spend less this festive season thanks to inflationary pressures as well grim job market scenario.
A recent survey by industry body Assocham on "High Prices Dampen Festive Spirit" shows that over 69% of Ahmedavadis from the middle and lower income group families said that steep rise in inflation, less opportunities of jobs and salary packages shrinking over the last year will make their festive seasons lackluster.
Delhi ranks first in curtailing their expenses followed by Mumbai (second), Ahmedabad (third) Chandigarh (foruth), Kolkata (fifth) and Chennai (sixth).
The quick survey done by Assocham found that during last year middle and lower middle income families on average spent nearly 29% of their salary on Diwali for shopping, sweets, gifting etc. This year, however, an overwhelming majority of middle and lower families in the country will be forced to rip their spends this festive season than the last year mainly because of persistently rising inflation. They have slashed their festive budget to meet first their monthly expenses, the report reveals.
The survey was conducted in a period of two months beginning August to September 2012 in major places like Delhi, Mumbai, Kolkata, Chennai, Ahemdabad, Hyderabd, Pune, Chandigarh, Dehradun among other cities.
Around 51% of respondents said that they plan to spend less amount on this festive seasons as the prices have gone up, 20% say that value of saving has gone down, while around 17% say that they are saving for big purchase and around 12% said that EMIs have increased.
The survey further highlights that double digit food inflation and higher cost of borrowing virtually unaffected high income groups in the period as it did not imbalance their earnings and spending.
Over 78% of the respondents said that if they plan to spend, that will only be in case there were high discount offers. Between 0-20% respondents will spend 46% of their monthly take home salary followed by 21-40% of the respondents will spend 26%, 41-60% will spend 17%, 61-50% will nearly spend 6% from their monthly budget.
Most of the Ahmedabad based respondents plan to cut down on personal expenses or go bargain hunting to keep their festive budgets in control. Over 54% of the respondents will buy only on sale or discounts, 27% will spend less on sweets, clothes etc, 12% will buy fewer gifts, 5% will buy recycle gifts and the rest 2% will buy a group gift.
Only a small percentage of respondents plan to take on more debt or dip into their savings when they go for shopping.