Increased consumer expectation/optimism during the festive season

Consumer perceptions as well as economic conditions and consumer expectations index rose last month

Consumer goods manufacturers have welcomed the growing trend of consumer shopping at the start of the 2022 festive season. Onam was also celebrated along with Ganesh Chaturthi festival. Then Navratri was celebrated. Thus, during September, there was a plethora of festivals across the country. And now the festival of Diwali is being celebrated.

According to CMIE's Consumer Pyramid Household Survey, the unemployment rate fell to a four-year low of 6.3 percent in September 2022 and the Consumer Perceptions Index hit a 30-month high. In September, the index increased by 7.1 percent.

The Consumer Perceptions Index (ICS) consists of two parts. Index of Current Economic Situation (ICC) and Index of Consumer Expectations (ICE). Both these indices rose in September. ICC grew by 7.9 percent and ICE by 6.5 percent. Both these indicators have increased significantly in rural and urban areas. The current financial situation is growing rapidly in both sectors. During this period, ICC in urban areas performed well at 8.3 percent and ICC in rural areas at 7.4 percent.

Once again, the buying trend of consumer durables in both urban and rural areas is on the rise. In urban India, a belief developed that this was the right time to buy consumer durables. Due to which there was an increase in the number of families buying such goods. In August, 15.5 percent of households in urban areas believed it was the right time to buy consumer durables. In September, such families increased by 18 percent. In rural India, this growth has increased from 8.7 percent to 15.3 percent. Both sectors reached their highest levels in September 2022 after March 2020.

In fact, consumer expectations have increased in both rural and urban areas. But it has increased more in urban areas than in rural areas. ICE in urban areas increased by 10%. However, in rural areas this increase was only 4.4%. Rural India is not very optimistic about its income during this year.

This is because poor rainfall, small farms and government efforts to curb fast-growing food crops in northern India have dashed villagers' hopes. But they are very optimistic about the medium-term outlook on the economy.

The way consumers think about things has changed in recent years. From January to June 2022, ICS grew in single digits every month and continues to grow. The growth rate of ICS in July, August and September was very poor. The rate increased by seven percent on expansion and 0.5 percent on contraction. The month's growth rate was driven by higher volatility overall. Hence the overall growth also increased. But prices rose due to volatility. In this context, the overall development of strong 7 percent growth in ICS in September 2022 is reassuring.

October started off on a strong note. ICS fell 0.7 percent in the week ended October 2. After this, the ICS rose 3.2 percent in the week ended October 10. In rural India, rates declined during both weeks, while urban India saw strong growth during the period.