Get a demo Do I subscribe? News sign-up
Print

Outlook lifts for Indian consumers

News, 10 August 2015

MUMBAI: After the Reserve Bank of India last week delivered an upbeat assessment of consumer sentiment in the country, analysts and senior business executives have expressed confidence about the outlook for the rest of the year.

India has suffered from declining growth and high inflation over the past two years, but India's central bank revealed last Tuesday that a combination of low inflation, increasing consumer confidence and optimism about job prospects are encouraging consumers to spend more, Live Mint reported.

This is especially the case in urban areas and the trend is taking place across segments, such as a strong uptick in FMCG and auto sales.

According to research firm Nielsen, the FMCG category grew 11% by value in the three months to June compared with the same period last year and that included 12% growth in the foods category while non-food grew by 10.8%.

This is filtering through to retailers, and Govind Shrikhande, managing director of Shoppers Stop, confirmed that the department store chain expected sales to improve this year across all categories.

Vivek Gambhir, managing director of FMCG giant Godrej, also expected 2015 to be better than previously, although he thought most of the improvement would flow through later in the year.

"We had started to see some improvement in urban demand since the end of last year. However, it is not yet as pronounced and will improve in the second half of this year," he said.

The feelgood factor has also extended to the auto sector, where passenger vehicle sales grew 6.17% in the second quarter, up from 4.4% in Q1 2015.

"The economy is on track and we expect demand from urban markets to pick up," said Randhir Singh Kalsi, executive director of sales and marketing at Maruti Suzuki India.

Further encouragement came from Sunil Sinha, an economist with India Ratings and Research, a subsidiary of Fitch Group, the global credit ratings agency.

According to their calculations, Sinha expected private final consumption expenditure to increase 8.2% in the current financial year, up from 6.3% in 2014.

Data sourced from Live Mint; additional content by Warc staff