Consumer sentiments to sustain elevated levels, predicts CMIE

By: Anshul Vipat

As predicted by experts, the consumer sentiments dipped as the scintillating glitter faded away and the compelling offers were withdrawn

The 2022 festive season has ended. Usually the festive season, which begins around Ganesh Chathurti and ends with Diwali, is expected to give a fillip to consumer sentiments. In 2022, Diwali fell at the end of October and signaled the end of the season. As predicted by experts, the consumer sentiments dipped as the scintillating glitter faded away and the compelling offers were withdrawn.

However, the good news is that the sentiments have neither collapsed, nor have they stepped down after the festive season. They seem to have sustained the elevated levels they had achieved during the festive season. This is reassuring. Consumer sentiments have not yet recovered to their pre-pandemic levels. But they are climbing steadily.

As per the latest Centre for Monitoring Indian Economy (CMIE)'s Index of Consumer Sentiments (ICS), consumer sentiments fell by 0.65 percent after a cumulative rise of 11.9 percent during September-October period. According to CMIE, in the week ended November 6 the Index of Consumer Sentiments (ICS) grew by 2.2 period but fell by 3.4 percent in the following week. As a result, the Index of Current Economic Conditions (ICC) as of the week ended November 13, 2022 was 1.6 per cent lower than it was in October 2022.

While the ICC has dropped, the Index of Consumer Expectations (ICE) has remained unchanged. This is significant. Deterioration in current economic conditions can adversely impact the outlook of households. But, this did not happen in the weeks immediately after the festival season ended. It is also important to note that a greater proportion of households believe that the economic environment in India will change for the better over the next 12 month period.

Changing consumer sentiments

Consumer sentiments have changed track in recent months. It had hit an all-time high of 105 just before the pandemic hit the country and then dropped to the lowest levels during both the COVID waves. Then, between January and June 2022, the ICS grew in low single-digits every month, but it also was growing at a gradually slowing pace of growth. During July, August and September, the ICS’s growth has been volatile as it has alternated between growing at about 7 per cent and shrinking by 0.5 per cent.

Bright future ahead

While the economic think-tank believes consumer sentiments will further slowdown. It may even stagnate to its October level. But, the substantial gains made in September and October are unlikely to rollback just because the festive season has ended. This is certainly a good news for our economy. A substantial decrease in retail inflation and food inflation has brought in fresh wave of optimism for the markets. Besides, the industrial production has increased this month. These parameters has shown hope for our economy.