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cmie: Consumer sentiments in India dip: CMIE

Consumer sentiments in India deteriorated in August 2022 and in the first week of September, after having improved substantially in the previous month, with significant dip in urban sentiments, the Centre for Monitoring Indian Economy said.

According to CMIE, the Index of Consumer Sentiments (ICS) shrunk by 0.5% in August, after having risen by an impressive 6.7% in July, and further by a 3.1% in the first week of September.

The urban ICS declined by 1.5% in August while the rural ICS remained unchanged while in the first week of September the urban ICS fell by 4.7% while the rural ICS fell by 1.5%, it said.

Even the Index of Current Economic Conditions (ICC) fell by 1.2% in August on the back of sharp dip in the propensity of the rural households to buy consumer durables. The rural ICC fell by 2.4% in August while the urban ICC moved up marginally by 0.6%.

As per the data, the proportion of households that stated that their incomes had improved over a year-ago fell to 14% from 16.3% in July and the proportion of households that considered these to be better times to spend on consumer durables fell substantially from 14.2% in July to 10.9%.

“This measure of households’ propensity to spend on consumer durables is the lowest since April 2022. This reticence of the households to spend could restrain the recovery of the Indian economy,” CMIE said in its weekly labour market analysis.

Overall, even the Index of Consumer Expectations (ICE) did not fare well across urban and rural India. The ICE for urban India fell by a substantial 2.8% in August, reflecting deterioration in all three relevant perceptions about the future, CMIE said.

This means that fewer households believe that their incomes would be better over the next year, less believe that the financial and business conditions would improve over the next year and less believe that India’s economic conditions would keep improving over the next five years.

Further, on all three counts more urban households believe that conditions would worsen, it said.

“The fall in the ICS in August is small at just 0.5% but rural India’s steep fall in willingness to spend on consumer durables and urban India’s skepticism regarding their future well-being is worrisome,” CMIE said, adding that higher fall in the ICS in the first week of September amplifies this worry.

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