Before GST 2.0, Almost 40% of Consumers Could Just About Manage Food Shopping: Survey
The Goods and Services Tax (GST) cut announced by the GST Council, effective from September 22, has been welcomed as a much-needed relief for Indian households. For millions of families, it marks the beginning of lower costs on essential food items and basic commodities. However, while this policy decision is expected to ease the financial pressure on consumers, a new report paints a concerning picture of how fragile household budgets had become even before the GST relief.
PwC India’s Voice of the Consumer 2025 report, released on Thursday, focused on the food industry and consumer spending patterns. The study reveals that nearly 40 percent of Indian consumers were barely able to manage food shopping earlier in the year. For them, discretionary spending on non-essential items was nearly impossible, with their entire budgets tied up in securing basic sustenance.
Findings of the Survey
The report highlighted that 32 percent of respondents identified as “financially coping”—a group that could cover their immediate food shopping needs but found little room for additional expenses. Meanwhile, 7 percent of respondents said they were “financially insecure”, meaning even basic food expenses were difficult to cover without financial strain.
Together, this adds up to almost 40 percent of consumers living on the edge of financial vulnerability. This sobering statistic reflects the wider economic pressures caused by inflation, stagnant wages, and rising living costs that continue to challenge households across the country.
According to the survey, these challenges are not uniform across all demographics. Lower-income households were disproportionately represented in the “financially coping” and “financially insecure” categories, while middle-class families reported cutting back on lifestyle purchases to focus solely on essentials.
The Impact of Inflation on Food Security
Food prices have been one of the key drivers of consumer distress in recent years. From pulses to edible oils, vegetables to packaged foods, the costs of household staples have steadily risen, often outpacing wage growth.
For many families, this has meant a shrinking food basket, where affordable substitutes replace more nutritious options. Rising dairy costs, for example, have led some households to reduce milk consumption, while soaring prices of vegetables and grains have altered diets significantly.
The PwC India report underscores how these price pressures not only impact health and nutrition but also reduce consumer confidence. Families forced to focus exclusively on managing food budgets are unable to spend on healthcare, education, or other vital areas, further restricting their quality of life.
GST 2.0 and Its Promised Relief
The GST 2.0 reforms, announced by the Council, aim to ease these burdens by cutting rates on a range of essential food and household items. While the exact categories and rate reductions vary, the broader goal is to lower overall costs for consumers and reduce inflationary pressures.
Experts say this step could free up some disposable income, enabling families to gradually reintroduce discretionary spending and improve their standard of living. The reform is also expected to benefit the retail sector, which has seen slower growth due to consumer cutbacks.
However, analysts caution that while GST relief is a positive move, it is unlikely to fully offset the structural issues of inflation and wage stagnation. Real, lasting consumer confidence will only return if broader economic reforms ensure stability in prices and sustainable growth in incomes.
A Snapshot of Consumer Priorities
The Voice of the Consumer 2025 report also sheds light on how spending priorities have shifted over the last year. Food shopping remains the absolute top priority, with most households dedicating the largest portion of their budgets to it.
Discretionary categories such as apparel, electronics, and lifestyle products have seen reduced spending, as consumers focus on survival rather than indulgence. Travel and leisure, once growing sectors, have also slowed down as financial insecurity reshaped household priorities.
Interestingly, the survey found that consumers are becoming more value-conscious. Shoppers now prefer private labels, discount stores, and local markets over premium retailers, with affordability driving nearly every purchase decision.
The Middle Class Under Pressure
Traditionally viewed as India’s growth engine, the middle class has not been spared from these struggles. Many middle-class families have moved from being “financially comfortable” to “financially coping” due to rising EMIs, school fees, and healthcare costs.
The GST 2.0 reforms may provide some breathing space, but for families juggling multiple financial obligations, the relief might feel limited. Experts argue that policymakers must focus not just on reducing tax burdens but also on creating pathways for income growth and job security, which are essential for restoring middle-class confidence.
Broader Implications for the Economy
Consumer spending is one of the key drivers of India’s economic growth. When households struggle to spend beyond basic needs, the ripple effects are felt across industries. Sectors such as retail, hospitality, entertainment, and even technology rely heavily on discretionary consumer spending.
The PwC India report signals a warning for businesses and policymakers alike: unless household financial health improves, economic momentum could stall. GST 2.0 is therefore seen not just as a tax reform but as a critical intervention to sustain consumer confidence.
Expert Reactions to the Report
Industry experts and economists have weighed in on the survey findings, emphasizing the urgent need for structural reforms. While praising the GST Council’s decision, they stress that reducing the financial burden on consumers must remain a continuous process rather than a one-off policy intervention.
Manpreet Singh, a consumer market analyst, observed that the survey findings highlight the fragility of Indian households. “The fact that nearly 40 percent of consumers are just managing their food budgets is a wake-up call. GST relief is an important step, but the government and private sector must work together to address inflation and create income opportunities.”
Looking Ahead
With GST 2.0 now in effect, there is cautious optimism that consumer sentiment will improve in the coming months. Lower food prices could restore some balance to household budgets, allowing families to shift from “financially coping” to “financially comfortable.”
However, the true test will be how well these reforms translate into long-term relief. Rising global commodity prices, supply chain disruptions, and domestic inflation trends will continue to challenge India’s economic outlook. Policymakers must remain vigilant and proactive to ensure that relief measures are sustained and expanded as needed.
The Road to Consumer Recovery
The findings of the PwC India report underscore the deep financial pressures faced by Indian households. While GST 2.0 offers a crucial lifeline, the road to consumer recovery requires a multi-pronged approach that includes inflation control, wage growth, and stronger economic stability.
For now, the relief on essential food items has offered a glimmer of hope to millions who have been struggling just to manage their food shopping. But for that hope to translate into lasting financial security, systemic reforms must follow.
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