Rural Food Spending Rises, Narrowing the Gap with Urban Consumption: Key Insights from HCES 2023-24

 The latest Household Consumption Expenditure Survey (HCES) 2023-24, released by the Ministry of Statistics and Programme Implementation (MoSPI), highlights significant shifts in consumer spending patterns across India. For the first time in over a decade, both rural and urban households saw an increase in the share of food in their monthly expenditures, likely driven by rising food prices.

Increase in Food Spending

In nominal terms, rural households allocated 47.04% of their monthly expenditure to food in 2023-24, up from 46.38% in the previous year. Similarly, urban households saw an increase from 39.17% in 2022-23 to 39.68% in 2023-24. This rise reverses a long-standing trend of declining food shares in household spending.

Shrinking Urban-Rural Gap in Consumption

The gap between urban and rural average monthly consumption expenditure has narrowed consistently over the past decade. In 2023-24, rural households spent an average of ₹4,122 per person per month, a 9.3% increase from ₹3,773 in 2022-23. Urban households, meanwhile, spent ₹6,996 per person per month, a rise from ₹6,459 in the previous year.

Over the last 11 years, the urban-rural gap in monthly per capita expenditure (MPCE) has shrunk from 83.9% in 2011-12 to 69.7% in 2023-24. This trend indicates that rural consumption is growing at a faster pace than urban consumption, signaling a positive momentum in rural economic activity.

Spending Trends Across Population Segments

Interestingly, the spending behavior varied across income groups:

  • The bottom 5% of the population in rural areas increased their spending to ₹1,677 per person per month in 2023-24, up from ₹1,373 in 2022-23. Urban counterparts saw a rise from ₹2,001 to ₹2,376.
  • The top 5% experienced a decline in spending, with rural MPCE dropping from ₹10,501 to ₹10,137, and urban MPCE decreasing from ₹20,824 to ₹20,310. This contrasts with other datasets that report rising expenditures on premium goods by wealthier groups.

Surge in Spending Among Lower Income Groups

The bottom 20% of the population recorded the highest percentage increase in spending. Rural households in this segment saw a 19.2% rise to ₹6,276, while their urban counterparts experienced an 18% increase to ₹9,156. Conversely, the top 20% reported marginal growth of just 1.5% (rural) and 1.1% (urban), reflecting a shift in spending trends favoring lower-income groups.

Impact of Social Welfare Programs

Including imputed values of goods received through social welfare schemes, the average monthly consumption expenditure rose to ₹4,247 in rural areas and ₹7,078 in urban areas in 2023-24, compared to ₹3,860 and ₹6,521, respectively, in 2022-23. This highlights the role of government programs in boosting consumption, particularly in rural areas.

Conclusion

The HCES 2023-24 data underscores a significant shift in consumption dynamics, with rural households outpacing urban ones in spending growth. Rising food prices, narrowing urban-rural expenditure gaps, and increased spending by lower-income groups are key trends to watch. As detailed insights are expected in the full report early next year, these findings already offer a window into India's evolving consumption landscape.



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