According to CMIE, the index of consumer sentiments fell by 0.2% in November on the back of a 1.5% dip in urban sentiments while it increased by 0.5% in rural India. As per the CMIE, the fall in the ICS in November 2022 comes after two months of robust increases when it had risen somewhat sharply by 11.4% in the preceding two months, which were the major festive months in India.
“A correction after the festivities is understandable. Interestingly, the correction is small (0.2%) compared to the rise (11.4%) and that consumer sentiments consolidated almost all the gains made during the festive months of 2022,” CMIE said in its weekly labour market analysis.
The consolidation of consumer sentiments in November rests upon an expectation that the economy will do well in the near and medium-term future. This is particularly true of rural India.
Further, the index of current economic conditions (ICC) declined by 1.6% in November with a rather sharp fall in urban India where it receded by 3.1% while the contraction in rural ICC was more modest, it said.
“The ICS seems to have sustained its elevated levels post the festival months partly because of the weddings season that has commenced. This is expected to last for a few months and could keep the demand for consumer durables elevated,” it added.
According to CMIE, rural India also holds out a promise because the rabi crop sowing seems to be progressing well. “Higher output along with the elevated prices for most agricultural produce bode well for the hinterlands,” it concluded.