Urban Indian Households Struggle To Cope With Rising Food Prices

A Survey Suggests Many Families are Barely Managing Bills While Striving to Keep Diets Healthy

September 12, 2025

Indian households in large cities and nearby suburbs are feeling the strain of higher food prices even as they adapt in creative ways, according to a report. About six in 10 households can pay their bills and save a little, but roughly four in 10 say they are either barely coping or financially insecure. Food inflation and volatile vegetable prices have made cost of living the top risk Indians see for the coming year.

As we know, consumers reduce their real purchasing power, which is the amount of goods they can buy with their income, when prices climb. To keep their food budgets steady, many Indians are turning to “saving behaviours,” according to a report by PricewaterhouseCoopers (PwC), one of the world’s largest professional services networks. The report draws most of its responses from people in large cities and nearby suburbs, with only a small share from small towns and rural areas.

Forty-one percent of Indian consumers shop in different stores to chase offers and 40 percent switch to cheaper store-branded products. Almost half buy in bulk and an equal share grow some of their own food. These are classic examples of substitution and income effects, which means people switch from more expensive goods to cheaper alternatives and sometimes even produce food at home to offset the income loss caused by inflation.

Despite this price sensitivity, taste and nutritional value remain powerful drivers of demand. Forty percent rank taste among their top three reasons for buying a food item, 39 percent rank price and 38 percent place high nutritional value in the top three.

Economists would note that while price elasticity of demand, or the degree to which quantity demanded responds to price changes, remains high for many foods, there is also a quality elasticity at play. People are willing to maintain spending on items that meet their expectations of taste and nutrition even when prices rise.

Food safety concerns have become even stronger than cost worries. Eighty four percent of respondents are very or extremely concerned about food safety, and many cite pesticide use and ultra-processed foods as risks. Here the concept of risk premium is useful, which means consumers are prepared to pay a little more for products that reduce health risk, such as organic or pesticide-free foods. This helps explain why brands with credible safety assurances can command higher prices even in a cost-conscious market.

Policy changes are shaping these dynamics, the report suggests. The new Goods and Services Tax rates cut taxes on essentials like milk and paneer to zero or five percent while raising them on carbonated and energy drinks. Lower indirect taxes reduce the effective price to the consumer, increasing real disposable income and easing food budgets. At the same time, higher taxes on sugary drinks use a form of Pigouvian tax, an economic tool to discourage consumption of goods with negative health effects.

Convenience also influences spending patterns, according to the report. Seventy percent of consumers shopped at supermarkets in the past year and more than half used on-demand grocery delivery. Nearly half buy ready-to-eat meals and more than four in 10 order takeout. These habits indicate an income effect in the opposite direction, that as households seek time savings, they spend on prepared food even when prices are higher. The cut in GST on restaurant meals from up to 18 percent to five percent makes dining out cheaper, effectively lowering the relative price of restaurant food and encouraging this behaviour.

There is also a strong shift toward health and wellness. Eighty percent of consumers use health apps or wearable devices and more than half would let generative AI plan their meals. Rising interest in fresh produce, vitamins and supplements shows that demand for nutrient-rich foods is increasing. In economics this can be seen as a shift in the demand curve, that at every price-level consumers now want more of these goods.

Sustainability concerns matter too. Nearly half prefer food with sustainable packaging and a majority say they would pay more to support environmental goals. This willingness to pay reflects what economists call non-market values, which means people derive utility not only from personal consumption but also from the perceived social and environmental benefits of their choices.

Overall, the report depicts a consumer who is cautious about spending yet determined to preserve nutrition, taste and safety. Indian households are managing the squeeze on real incomes by substituting cheaper goods, growing their own food and seeking promotions, while also showing readiness to invest in healthier and more sustainable options.

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