Inflation and wheat, sugar export ban dampen shopper sentiment

Shopper sentiment fell sharply within the final week of Might, extra so in rural India than city, on the again of an export ban on wheat and sugar in addition to increased inflation, the Centre for Monitoring Indian Financial system (CMIE) mentioned.

In line with information from the unbiased assume tank, the index of shopper sentiment (ICS) tanked by 9.4% within the week ended Might 29. The ICS fell by 5.9% in city areas, whereas the drop was a lot steeper – by 11.4% – in rural areas.

“Provided that the autumn was extra hanging in rural India, it’s fairly doable that the controls on wheat and sugar export may very well be accountable,” CMIE mentioned. “We could conjecture that measures to regulate inflation damage sentiment in rural India however the continued elevated inflation hurts city India,” it added in its weekly labour market evaluation.

Although the 30-day shifting common as of Might 29 dropped to 67.91, it was nonetheless increased than April’s 67.2. CMIE mentioned ICS may very well be increased in Might in comparison with April, which might be the best in comparison with any month since March 2020 – earlier than the nationwide lockdown due to the Covid-19 pandemic.

“Nevertheless, there are indicators that the regular enchancment in shopper sentiment seen up to now throughout 2022 could also be slowing, and even reversing,” it cautioned.

In line with CMIE, the slender development in Might implies a slowing down of month-to-month development fee of ICS. From January by way of April, ICS noticed month-to-month development charges of between 3% and 5%.

“In comparison with different financial indicators, the restoration in ICS from the lockdown-induced drop in April 2020 has been distinctly slower,” CMIE mentioned. ICS, which incorporates perceptions about present and future well-being of households, takes longer to recuperate from a extreme financial shock, it added.
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