Let the original price be $100$.

After $16%$ increase, new price becomes:

$100+16=116$

To keep expenditure same, consumption should be reduced.

Required percentage reduction is:

$\frac{\text{Increase}}{\text{New Price}}\times 100$

$=\frac{16}{116}\times 100$

$=13.7931%$

Rounded to two decimals,

$=13.79%$

Therefore, the correct answer is option $1$.