The steady increase in petrol and diesel prices has boosted inflation in the past few months, but has forced consumers to cut back on essential costs. According to a report by SBI Research, consumers are cutting costs, including healthcare, because of expensive oil.
Analysis of the SBI card’s spending model indicated that consumers were cutting costs, including fuel. Souma Kanti Ghosh, chief financial advisor at SBI Research, said, “Consumers are cutting costs, including groceries, after rising fuel costs, thereby reducing demand for these items.”
Also Read: Inflation, flour-rice-pulse prices, oil revenues for 7 months, milk prices increased
The share of fuel costs rose to 75 percent
The fuel cost share increased from 62 per cent in June 2021 to 75 in June 2021 compared to March 2021, the report said. In April-May 2020, the share of discretionary expenses reached 84 percent. The impact of rising petrol and diesel prices comes at a time when most households across the country face high medical costs due to the COVID epidemic and rising commodity prices. This is ruining their monthly budget. This has affected people’s savings. Many families are using their savings to cover the increased costs.
The pace of improvement is slow
Economists say rising inflation due to oil will work to slow the economy’s recovery. People’s budgets are affected by expensive oil. On the other hand, the financial position of families is crucial as income is declining. This affects market demand, which keeps the economy from getting back on track.
It is necessary to reduce the tax on fuel
The report suggested that it would be necessary to quickly cut the tax on fuel to create demand in the market and provide relief to the people. What’s special is that in the last one year, the price of Brent crude oil has increased by over 76 per cent and per barrel. 75.35 to reach. In the last few weeks, the price of petrol has been increased to Rs 100 per liter in several cities across the country To remedy this, the government should cut taxes on fuel as soon as possible.
More critical than the global situation
According to the survey report, the financial position of Indian consumers is much weaker than that of global consumers. According to the survey, the number of consumers in the new forced or restrictive segment globally is 46 percent, compared to 63 percent in India. This shows that the financial position of Indian consumers has deteriorated due to corona. Its impact on its purchase and spending is being seen.