Private Final Consumption Expenditure (PFCE), which measures total consumption expenditure by households and non-profit institutions serving households on goods and services, serves as a useful proxy for consumer spending especially as income and consumption are concentrated within the consumer classes. Additionally, the final consumption, which also includes government consumption expenditure, constitutes 68% of the GDP for India and 53% for China. Secondly, despite the gloomy narrative around China’s consumption, its PFCE has registered a significant increase in the past four years. Even as food and beverages constitute the biggest chunk of China’s consumption, it is declining as a percentage of its total consumption expenditure — a sign of a maturing market. In aggregate terms, India spends around half of what China spends on food, transport and communication, and clothing and footwear.

Source: The Hindu May 21, 2024 08:27 UTC