Average Indian household to spend 35.3 pc of budget on food in 2025: Fitch

The average Indian household will spend 35.3 per cent of total household budget on food in 2025, increasing by 2.1 percentage points from 33.2 per cent in 2005, Fitch Solutions said on Friday.

Growing wages and disposable income has led to this change in proportion over the past 20 years, enabling the average Indian household to afford more than just basic food staples.

Between 2005 and 2025, the number of households with an annual disposable income of 5,000 dollars and above will increase by 57.7 percentage points (or 173 million households) from 2.1 per cent in 2005 to 59.8 per cent in 2025.

Over 2005-2025, Fitch forecasts food spending to grow by an annual average of 12 per cent compared to the annual average inflation rate of 6.3 per cent over the same period, indicating real growth in food spending over this period.

As a result, there are several instances of shifts in dietary spending stemming from income growth with consumers spending a lesser proportion of their food spending on staple food items such as rice, trading up for other food products such as animal proteins.

When breaking down the average Indian household spend on food, three food categories (meat and poultry, bread, rice and cereals and fruits) will account for nearly 70 per cent of total food spending in 2025.

Meat and poultry products will account for the largest share at 30.7 per cent of total food spending; bread, rice and cereals at 23.8 per cent; and fruits at 16 per cent.

These three food categories will see their share of total food spending increasing from 48.4 per cent of total food spending in 2005 to 70.5 per cent in 2025.

Within the three dominant food categories, Fitch said Indian consumers spending on bread, rice and cereals will decrease from 28.8 per cent of total food spending in 2006 to 23.8 per cent in 2025 with more spending directed towards proteins like meat and poultry as household disposable income grows.

Proportionally, spending on meat and poultry will increase by an impressive 17.5 percentage points from 13.2 per cent of total food spending in 2005 to 30.7 per cent in 2025 while spending on fruits will increase from 6.4 per cent to 16 per cent over the same period.

( With inputs from ANI )