Name: Gangadhara. R.
Country: India

Year: 2026
Volume: Vol-11, No.2, July-Dec-2026
Page Number: 41-56
DOI: https://doi.org/10.5281/zenodo.21410132

ABSTRACT
Inflation is one of the most significant macroeconomic challenges affecting the economic well-being of households in India. Persistent increases in the general price level reduce the purchasing power of consumers and influence their spending behaviour, savings, and overall standard of living. This study examines the impact of inflation on household consumption in India using secondary data collected from official publications of the Reserve Bank of India (RBI), the Ministry of Statistics and Programme Implementation (MOSPI), the Economic Survey of India, the National Sample Survey (NSS), the World Bank, and the International Monetary Fund (IMF). The study adopts a descriptive and analytical research design to evaluate trends in inflation and household consumption expenditure across rural and urban India. It explores the effects of food inflation, fuel price fluctuations, and core inflation on consumption patterns, particularly among low- and middle-income households. The study also reviews existing literature to identify major determinants influencing household consumption under inflationary conditions. The findings indicate that sustained inflation significantly erodes real income, alters household expenditure priorities, reduces discretionary spending, and increases financial vulnerability. The study further highlights the importance of effective monetary and fiscal policies in maintaining price stability while protecting household welfare. Appropriate policy measures, including inflation targeting, strengthening public distribution systems, improving agricultural productivity, and expanding social protection programmes, are essential for sustaining household consumption and promoting inclusive economic growth in India.

Keywords: Inflation, Household Consumption, Consumer Price Index, Purchasing Power, Inflation Targeting, Food Inflation, India.