Engel's law

13 Jul 2023 1 mins Download PDF

Engel's law

• It states that, as income increases, the proportion of income spent on food decreases, even if absolute expenditure on food rises.
• As the economy grows with increases income in the hands of the people, this trend can be witnessed.
• This formed the basis for reduction in weightage of food in the CPI basket from 60.9 (1960) to 46.2 (2001).