International Journal For Multidisciplinary Research

E-ISSN: 2582-2160   •   Impact Factor: 9.24

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The Effect of Rising Cost of Living on the Expenditure Behaviour of Middle-Income Families

Author(s) Ms. Nitisha Srivastava
Country India
Abstract The rising cost of living has become a critical challenge for middle-income households, reshaping their expenditure patterns and financial stability. This study examines how inflation-driven increases in the cost of essentials such as food, housing, healthcare, education, and transport have altered household behaviour in India between 2020 and 2025. Relying on secondary data from the Household Consumption Expenditure Survey (HCES) 2023–24, Reserve Bank of India (RBI) reports, and international sources including IMF and OECD, the research employs descriptive statistics, comparative analysis, and trend evaluation. The findings reveal three major shifts: first, both rural and urban households have increased their allocation to essentials, with non-essential spending particularly on education, recreation, and clothing declining. Second, household savings have fallen sharply from 22.7% of GDP in 2020 to 18.1% in 2024, with further declines projected for 2025. Third, families are prioritizing survival needs while postponing long-term investments, often relying on credit to sustain consumption. These behavioural adaptations highlight the growing financial vulnerability of India’s middle class. The study concludes that unless targeted interventions such as middle-class tax relief, expanded public healthcare and education, and financial literacy initiatives are implemented, the erosion of household savings and cutbacks in human capital investment may undermine both social mobility and long-term economic resilience.
Keywords Cost of Living, Middle-Income Households, Inflation, Consumption Patterns, Household Savings, India, Financial Resilience
Published In Volume 7, Issue 5, September-October 2025
Published On 2025-09-11
DOI https://doi.org/10.36948/ijfmr.2025.v07i05.55480
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