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

New Delhi: Food continues to account for more than half of rural household consumption expenditure, with households allocating an average 53.5% of their monthly spending towards it, even as concerns over inflation gather pace, according to the latest Rural Economic Conditions and Sentiments Survey commissioned by the National Bank for Agriculture and Rural Development (NABARD).

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.

Savings under pressure

The survey, however, presented a mixed picture of rural economic conditions, with consumption remaining resilient even as income growth perceptions and financial savings showed signs of moderation.

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.

Income outlook

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%.

Employment expectations were relatively stable, with 94.8% of households expecting employment conditions to either remain unchanged or improve over the next quarter. About 38.8% expected an improvement, while 5.2% anticipated deterioration.

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%.

Survey methodology

The September round of the Rural Economic Conditions and Sentiments Survey covered 6,000 households across 600 villages in 28 states and one Union territory — Jammu & Kashmir. Together, these regions account for around 99% of India's rural population, according to the report.

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.