The ever-increasing prices of petrol and diesel are taking away the spending power of the people. Since the last few months, its rising price has raised concerns about consumer spending. According to a report by SBI, due to the increasing expenditure on petrol and diesel, people have started cutting other expenses. The cost of petrol and diesel has increased so much that it has started reducing the expenditure on health. The economic wing of SBI has analyzed the expenses incurred from the card and said that due to the tremendous increase in the price of petrol and diesel, people are reducing even health expenses to adjust the increased expenses.
Spending on grocery and utility services reduced due to lack of money
SBI Chief Economic Advisor Soumya Kanti Ghosh said that due to the price of petrol and diesel, the expenditure on grocery and utility services has started coming down. A decrease in the demand for these things proves that these expenses have come down. The report said, “From March 2021 to June 2021, mandatory expenditure like petrol and diesel has increased from 62 per cent to 75 per cent, compared to 84 per cent in the previous year (2020).
Now people are putting their hands in savings to run the expenses
Petrol-diesel inflation has gained momentum at a time when people may have to incur more medical expenses due to COVID infection. People now have to depend on their savings to meet their expenses. According to the initial assessment of RBI, the savings rate of households declined to 8.2 percent of GDP in the third quarter of the financial year 2020-21. Whereas in its last two quarters it was 21 and 10.4 percent respectively. During the first round of Corona, in the quarter of March-June (2020), in the second round of Corona (March-June 2021), the money deposited by people in many districts was spent more rapidly.
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Petrol fire in retail inflation
Meanwhile, retail inflation is rising rapidly. Retail inflation rose to a record 6.26 per cent in June. During this period, the inflation of fuel and light increased from 11.86 per cent to 12.68 per cent. SBI says that a 10% increase in the price of petrol can lead to an increase in retail inflation by half a percentage point.