Rising fuel prices eating into health spends: SBI report

A spike in fuel prices, which are near record highs, is not just impacting the inflation number but may be forcing consumers to cut nondiscretionary spending, including on health, as it eats into their consumption expenditure, a report by the State Bank of India’s research wing has said.

“Our analysis of SBI card spends indicates that spend on non-discretionary health expenditure has been substantially reduced to accommodate increased expenditure on fuel. In fact, such spending has more than crowded out the spending on other non-discretionary items, like grocery and utility services to such an extent that the demand for such products has significantly declined.

The share of nondiscretionary spend on items like fuel has jumped to 75% in June, 2021 from 62% in March, 2021,” it said. Citing the data, the agency argued that there was an urgent need to lower fuel prices through tax rationalisation.

While the governments, at the Centre and in states, have been mopping up revenue through high excise and VAT on petrol and diesel, economists have now started suggesting a reduction in levies.