Indian households have significantly reduced their spending on clothing and footwear over the past three years, reflecting the combined impact of inflationary pressures and stagnant wages, according to the latest data released by the National Accounts Statistics.
Consumer expenditure on clothing and footwear stood at Rs 4.52 trillion in the financial year 2023-24, marking a 7% decline from Rs 4.94 trillion in 2021-22. This dip underscores a growing trend of cautious spending among Indian consumers.
A deeper look into the data shows that footwear consumption remained largely stagnant, slipping marginally from Rs 1 trillion in FY21 to Rs 99,000 crore in FY24. However, the clothing segment witnessed a sharper decline, falling from Rs 3.93 trillion in FY22 to Rs 3.53 trillion in FY24.
According to a Business Standard report, the decline is primarily driven by rising inflation and a lack of growth in household incomes. These economic constraints have forced many consumers, particularly in rural areas, to prioritise essentials over discretionary purchases like apparel and shoes. The downward trend follows the earlier impact of the COVID-19 pandemic, which triggered a 15% drop in spending on clothing and footwear in FY2020- 21.
Recent figures from the Ministry of Statistics highlight the disparity in consumption patterns across rural and urban India. The Monthly Per Capita Consumption Expenditure (MPCE) in 2023-24 was estimated at Rs 4,122 in rural areas and Rs 6,996 in urban regions. However, the spending gap between the two segments has narrowed over the years, down to 71% in 2022-23 from 84% in 2011-12.
Interestingly, household spending has shifted more towards non-food items in FY24. Despite this shift, beverages and processed foods continue to be dominant contributors to the overall food expenditure basket. The data signals a cautious consumer mood and highlights the need for policy support to boost income growth and restore consumer confidence in discretionary spending.