Most Indians expect prices to go up in next year

Study says Indian households expect economy to worsen in 2014

Even if inflation figures seem to indicate easing of food prices, the common man believes otherwise. According to a study conducted by Principal Retirement Advisors (India), 77% of the  respondents feel that prices of groceries, fuel and other household items will go up in next one year.

Majority of them feel that increase in prices for food and beverages and transportation are likely to affect the budgets seriously.

The study has been conducted along with its research partner – Nielsen Company in the last quarter of 2013. The Well-Being Index is an initiative of the Principal Financial Group and it is currently in its 12th year running in the USA. The group has introduced the study in India this year.

The study was conducted in 11 cities and a total of 1664 Indian households were interviewed. The respondents were between age 25 to 60 years with an annual income of Rs 5 lakh plus. Nearly 48% of the households who were surveyed expect the economy to worsen in 2014.

This pessimist view was seen more by the older population. The participants listed fuel prices, food prices, rising inflation and unemployment as the top concern areas for the economy in the next one year, said the press release issued by Principal Retirement Advisors.

Respondents are concerned about rise in home loan interest rates and rupee falling more against the rupee in the next one year.

Most households expect spending to increase all expense categories, with buying a house or property and children's expenses (education and marriage) as the key big ticket expenses expected in 2014.

74% households are satisfied with their current levels of savings, 69% are satisfied with their current level of investments and 67% households say their savings have stayed the same in past one to two years.

Seventy-three people say they are not planning a holiday in 2014 and out of the remaining who are planning a holiday, 60% say they will spend the same amount as last year.

To cope with unexpected expenses, 42% households plan to cut down on non-essential items and 38% plan to use money from savings. This indicates that people will have no specific preparation to cope with emergencies, the press release said.