Food accounts for 53.5% of rural household spending as inflation rises: NABARD survey

The September 2026 round of the survey, published on NABARD’s website on 4 November, revealed that the share of food in monthly consumption expenditure has remained within a relatively narrow range of 52.4% to 56.7% since September 2024, indicating no significant structural shift in rural household spending patterns despite seasonal fluctuations and volatility in food prices.

The proportion of households spending 40-60% of their monthly consumption expenditure on food increased to 46.4% in September from 42.8% in July. Meanwhile, the share of households allocating 60-80% of their consumption expenditure to food declined to 24.7% from 27.4% over the same period.

The findings come against the backdrop of rising rural inflation. According to the report, rural inflation, measured by the consumer price index, increased to 6.08% in September from 5.24% in August and 4.84% in July. Average inflation perceived by surveyed households also rose to 5% in September from 4.5% in the previous round.

Near-term inflation expectations increased as well, with households expecting inflation to average 5% over the next quarter, the highest level since the May 2025 round. One-year-ahead inflation expectations edged up to 5.9% from 5.8% in July.

About 76.7% of surveyed households reported an increase in consumption expenditure during the preceding year. Meanwhile, 79.5% reported either stable or increased household income, although the net response on income declined to 6.7 in September from 7.9 in July, indicating that while positive sentiment remains intact, the gap between households reporting income gains and those reporting drops has narrowed.

Consumption expenditure accounted for 65% of monthly household income, while 25.8% went towards loan repayments and savings. Within the consumption basket, food accounted for 53.5%, followed by education and health at 24.11%, and fuel, including cooking and transportation, at 16.63%.

Household savings remained another area of concern. While 67.9% of households reported either stable or increased financial savings over the preceding year, the net response deteriorated to negative 15.4 in September from negative 10.8 in July.

The proportion reporting a decline in savings increased to 32.1% from 28.6% over the same period. Meanwhile, borrowing activity gathered pace. The proportion of households reporting an increase in borrowings rose to 32.4% in September from 28.7% in July.

The net response on borrowings increased to 11.8 from 6.7, indicating a greater proportion of households reporting higher borrowing than those reporting a decline. The survey also highlighted the continuing importance of formal credit channels in rural areas.

The share of households relying exclusively on formal or institutional sources of credit increased to 52.6% in September from 51% in July. Those relying exclusively on informal sources declined to 22.1% from 23.7%. However, borrowing from informal sources remained expensive.

The average annual interest rate paid on such loans increased to 18.3% in September from 17.8% in the previous round. Around 75% of households relied exclusively on informal credit borrowed only from friends and relatives, while around 20% of respondents reported paying no interest on their informal loans.

On the income outlook, 43% of households said they expected their income to improve over the next quarter, compared with 41.2% in July. The proportion expecting an improvement in income over the next year increased to 67.9% from 66.8%.

Government transfers continued to supplement rural household incomes. Their average share in monthly household income stood at 8.3% in September, marginally higher than 8.1% in July. The proportion of households receiving no government transfers declined to 14.9% from 16.2%.

On rural infrastructure, roads continued to rank as the most favourably perceived area of development, with 45.3% of households identifying them as their top area of satisfaction. Education followed at 13%, while electricity accounted for 8.9%.

The survey was conducted during the last week of August and the first week of September. It was designed by the department of economic analysis and research at NABARD, while the academy of management studies conducted the field survey after finalising the sampling design in consultation with the department.

The survey follows a stratified multi-stage sampling design, covering 160 districts across 80 national sample survey regions. Ten households are surveyed in each village, with households selected across well-off, middle-income and low-income hamlets.

The September round also marked the start of a phased revision of the sample. Under the new approach, 100 of the 600 villages will be randomly replaced in each of the next six rounds with comparable villages from the same districts.

The change comes amid growing non-response rates among repeatedly surveyed households and a shortage of replacement households in smaller villages. Harsh Kumar is a policy reporter at Mint (HT Media Group), where he covers the Ministry of Commerce and Industry along with key departments of the Ministry of Finance, including the Department of Economic Affairs (DEA) and the Department of Financial Services (DFS).

With over five years of experience in business and economic journalism, he has developed strong expertise in tracking policy developments and their wider economic impact. He has previously worked with Business Standard, Moneycontrol, and Outlook Money, where he reported extensively on banking, financial services, and the broader economy.

Over the years, he has built a reputation for delivering accurate, insightful, and impactful stories, supported by a keen eye for detail and a consistent track record of breaking exclusive news. An alumnus of Jamia Millia Islamia, Harsh closely follows regulatory changes and key economic trends shaping India’s financial and industrial landscape.

His reporting aims to simplify complex policy issues for a...