EFFECT OF INFLATION ON INDIAN CONSUMER'S PURCHASE INTENTION

Indian economy is transforming into a consumption based economy from the early state of survival economy. Sustained increase in the prices of essential commodities over time has lead to a fall in the purchasing power of consumers and changes their consumption pattern. Even though the Planning Commission report projects that the, Indian economy would grow at the rate of 9-9.5 percent during the 12th Five year plan period (2012-2017), consumers in India are feeling the inflationary heat and are worried about their spending. Due to inflation, consumers are paying more for essential commodities and their savings are disappearing slowly. Inflation affects the consumer spending, business investment and over all mode of the economy. Keeping inflation low and stable has been one of the major challenges for the Indian government and the central bank. In the current macroeconomic scenario, inflationary condition creates uncertainty for the consumer about their purchase decision which will affect the whole business cycle. This paper focuses on how inflation affects the Indian consumer's spending and its effect on purchase intention. Research findings and discussion will be useful to marketers, retailers and policy makers.