March Discretionary Spending Slows, Driven by Declines in Salon and Fast Food Transactions

Discretionary Consumer Spending Loses Momentum in March

Discretionary consumer spending in India lost some momentum in March, with daily payments falling across categories such as beauty and barber shops, fast-food restaurants, and dining outlets compared with the preceding month. Even as essentials continued to see steady traction, the slowdown may indicate households becoming more selective in non-essential spending amid inflationary pressures and dwindling sentiment owing to the West Asia crisis.

Slowing Down in Non-Essential Categories

Payments at beauty and barber shops fell to 2.83 million daily transactions in March from 3 million in February, while fast-food restaurants declined to 47.57 million from 49.39 million. Transactions at eating places and restaurants also eased to 40.35 million from 41.63 million in the previous month. The moderation in these categories is often seen as an indicator of softer urban discretionary demand, as spending on quick service meals, grooming, and eating out tends to respond quickly to household income sentiment and rising prices.

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Essentials Continue to Expand

In contrast, categories linked to necessities continued to expand. Groceries and supermarkets rose to 121 million daily transactions in March, up from 117.28 million in February, while dairy purchases climbed to 6.89 million from 6.3 million. The divergence points to consumers prioritising essentials while trimming lifestyle and convenience spending.

Digital Consumption Continues to Grow

Some categories continued to show structural growth. Online marketplaces rose to 4.57 million daily transactions, while purchases of digital gold climbed to 8.21 million, as gold prices declined during the month. Securities brokers and dealers' transactions also remained strong during the month, with the pace of expansion intact at 47 percent. Telecom-related payments also increased to 29.5 million daily transactions, underscoring the sticky nature of recurring digital payments.

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Impact of West Asia Crisis

The Indian economy witnessed a tough month as the West Asia crisis weighed heavily on manufacturing and infrastructure activity. The shortage of LPG owing to the West Asia war may also have impacted discretionary spending, with the government imposing curbs on the supply of commercial LPG.