The frequent rise in fuel (petrol and diesel) prices has been a cause of major concern for the last few months and its impact can now be seen on consumer spending. According to a recent report by State Bank of India (SBI), rise in fuel prices has led to crowding out on other expenses like health. The economic wing of SBI analysed card spends which indicated that expenditure on non-discretionary health has been reduced substantially in order to accommodate increased expenditure on fuel, a note authored by group chief economic adviser Soumya Kanti Ghosh said

Petrol prices breached the Rs 100 per litre mark across the country, while diesel is also closing in on the three-figure mark per litre. As per estimates, over Rs 40 per litre goes as taxes and excise to governments at the Centre and states. The taxes were increased when the global crude prices had dropped but have not been rolled back even as crude prices have rebounded. "As consumers are spending more on fuel, it is crowding out expenses on health. Our analysis of SBI card spends indicates that spend on nondiscretionary health expenditure has been substantially reduced to accommodate increased expenditure on fuel," Ghosh said.

"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," he added.

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