New Delhi, Sept 16 (KNN) After growing every month since January 2023, consumer sentiment in India saw a decline of 1.5 per cent in August 2023, according to Economic Outlook from the Centre for Monitoring Indian Economy (CMIE). 

The average monthly increase in India's consumer sentiment from January to July 2023 stood at 2.6 per cent

The decline in consumer sentiment could potentially affect Indian businesses preparing for peak sales during the upcoming festive season. 

A significant component of CMIE's consumer sentiment index is the consumers' inclination to purchase durable goods like cars, TVs, and other household appliances.

Analysts noted that one of the primary factors influencing the sentiment is monsoon. “August has been really bad in terms of monsoon and that could be dampening sentiment,” said Ajay Thakur, analyst at Anand Rathi Institutional Equities.

Another significant challenge has been family incomes. From December 2022, when only 17.4 percent of households reported a higher income compared to the previous year, the figure rose steadily to 30.2 percent by April 2023. 

However, this growth plateaued at around 30 percent for the next five months until August 2023. Such a standstill hasn't been observed in the past two years, a period considered the post-pandemic recovery phase. 

For context, prior to the Covid pandemic, between 32 percent and 36 percent of survey participants reported an increase in their incomes compared to the previous year.

Households in India have also been pessimistic about their future incomes. “The proportion of households that said that they expect their household income to rise a year into the future fell from 25.6 per cent in July 2023 to 23.7 per cent in August; this is the lowest proportion since March 2023,” said Mahesh Vyas, CEO, CMIE, in a research note. 

“Further, the proportion that said that they expected their incomes to fall a year later rose from 15.3 per cent to 17.7 per cent, which is also the highest in the last three months,” he states.

Persistent high consumer inflation only further dampens consumer sentiment. The provisional consumer price index (CPI) for August has been 6.83 per cent. July saw an inflation of 7.44 per cent.  (KNN Bureau)