Inflation Weighs On Retail Sales Growth In June

Retail sales in June grew at a slower pace over the pre-pandemic level as surging inflation and weak sentiments weighed on consumer spending.

The value of purchases grew 13% over the June 2019 level, according to data released by the Retailers Association of India on Monday. Sales rose 53% year-on-year on a low base.

This follows a 24% jump in May and 23% increase in April sales over the 2019 levels.

Retailers, as part of the survey, said the second half of June was not very “encouraging” compared with the last two months, due to fewer celebratory occasions such as weddings.

Sales across categories showed a steady increase with sports goods and jewellery performing better than the rest, including beauty and cosmetics, furniture, apparel, consumer appliances, footwear and grocery.

Sales in east India rose 17%, while west reported 11% growth in business, the survey said. South India saw 9% growth, while north reported a 16% rise over June 2019.

“The headwinds of inflation on consumer spending is still a worry and may impact the upcoming festive fervour,” Kumar Rajagopalan, chief executive officer at the association, said. “We will have to wait-and-watch how the next two months pans out.”

Consumer inflation eased for the second consecutive month in June to 7.01% but remained above the Reserve Bank of India’s upper target for the sixth straight month.

Consumer sentiments, however, remained sluggish. The Index of Consumer Sentiments grew 1.1% in June against 4-5% growth seen in January and February, data from the Centre for Monitoring Indian Economy showed. In March and April, the index rose 3%.

Future expectations, as expressed by the Index of Consumer Expectations, too, grew at a slower pace of 13.2% in June, the data showed.

“Household incomes are improving slowly, but their perception regarding the future is eroding,” CMIE said in its weekly labour market analysis. “This erosion impacts their propensity to spend on non-essentials.”

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