Soaring fuel prices crowd out other spends on credit cards: Report

PTI | Mumbai | Updated: 22-01-2021 16:23 IST | Created: 22-01-2021 16:14 IST
Soaring fuel prices crowd out other spends on credit cards: Report
Representative image Image Credit: ANI

Massive rise in retail fuel prices crowded out other discretionary spends on credit cards in December, according a report by SBI Research.

Non-discretionary spends on credit cards has come back to 65 per cent of the total spends, while discretionary spending has fallen below the trend rate of 35 per cent, said the report authored by Soumya Kanti Ghosh, chief economic advisor at SBI group.

This has happened as spend on oil has crowded out in December spending on other essential items such as health, grocery and utility services which was the trend in earlier months.

Share of non-discretionary spend in December has jumped to 65 per cent, the same as before the coronavirus pandemic on account of only fuel spends, the report said adding that the finding is based on spends on SBI credit cards.

The pandemic has changed the spending habits of consumers significantly and that too within essential/ non-discretionary and non-essential/ discretionary items.

In principle, the share of discretionary spending that had reached 35 per cent of total cards spending in February 2020 had crashed to 15 per cent in April and since April, the share of discretionary spends fluctuated wildly between 15 per cent and 35 per cent.

Ghosh said the single biggest factor that has driven this change is the massive spike in inflation between April and November, which on average stood at 120 bps lower than NSO inflation numbers at 6.3 per cent.

''This has happened as spend on oil has crowded out the spending on other essential items, like health, grocery and utility services in December,'' said the report.

It called for ''an urgent reduction in oil prices through tax rationalisation'' otherwise, ''non-discretionary spends will continue to get distorted and crowd out discretionary expenses''.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)



Addressing conflict-related sexual violence at long last

... ...

Why unequal access to coronavirus vaccines is a threat to us all

... ...

India’s love affair with fossil fuels: the path to sustainable development?

... ...


Latest News

Hours-long reading of legislation delays debate on Biden's $1.9 trillion COVID-19 bill

The U.S. Senate voted on Thursday to take up President Joe Bidens 1.9 trillion coronavirus aid bill, but put off the start of a contentious debate until the full text of the 628-page bill was read aloud. The party-line vote of 51-50, with D...

Russia reports 11,024 new COVID-19 cases, 462 deaths

Russia on Friday reported 11,024 new COVID-19 cases, including 1,757 in Moscow, taking the national case total to 4,301,159.Authorities said 462 people had died in the last 24 hours, pushing the official death toll to 88,285. ...

France could block vaccine shipments, similar to Italy -Veran

France could block shipments abroad of COVID-19 vaccines, similar to moves on this front by Italy, said French Health Minister Olivier Veran on Friday. Asked by BFM TV if France could follow Italys move on this, Veran replied We could.On Th...

China defence spending gets mild boost amid economic caution

Chinas 2021 defence spending will rise 6.8 from 2020, up just slightly from last years budget increase and broadly tracking the governments modest growth forecast, as the worlds second-largest economy emerges from the pandemics fallout.Prem...

Give Feedback