Lifestyle inflation, in which customers shift to higher-end items, has outpaced price increases in necessities every year since FY18. While lifestyle inflation is a reflection of demand that is often controlled by policy rates, price increases in critical goods are a supply-driven phenomena that requires focused government intervention.
According to a research by the Bank of Baroda’s economics department, the rate of lifestyle inflation has increased since fiscal year 2018. From 4 per cent in FY18, it has increased to 6.4 per cent in FY23. During the same period, per capita gross national disposable income increased at an 8.5 per cent CAGR.
Lifestyle products such as glassware and cutlery climbed from 2.8 per cent to 6 per cent, candles from 3.1 per cent to 7.1 per cent, and monthly maintenance expenses from 2.2 per cent to 10.9 per cent.
Similarly, motor vehicle sales increased from 2.4 per cent to 7.7 per cent. Electronic products also witnessed increases, with mobile phones rising from 0.3 to 5.9 per cent and PC/laptops from 1.6 to 9.1 per cent. Clocks and watches climbed from 4.9 to 7.9 per cent, while travel items increased from 1.1 to 3.8 per cent.
The research stated that these developments reflect rising affordability and a desire for higher living standards.
