Consumer demand under pressure

The pent-up demand fuelled by pandemic time savings is beginning to peter out for goods, say economists.

Overall consumer demand is also expected to come under pressure from tighter monetary conditions and lesser pull from rural India. However, high-end consumption is expected to provide some support.

“Inequality is playing out. Whenever there has been recovery, it’s either been heavily biased towards the more affluent and upper-middle tiers or where it has been mass-based, there has been downtrading,” said a Banker.

Downtrading refers to consumers choosing lower-end brands or lower-pack sizes. “This is a sign that your pent-up demand has petered out already.”

On one hand, there is pressure on house-hold budgets among some sets of consumer. On the other hand, Indian consumer, particularly those in urban areas, have not hesitated to invest in budget-friendly treats.

Tighter monetary conditions may play out in the coming months with interest rates likely to remain elevated for longer than expected now.

“Volume growth remains a challenge, and whatever growth is happening now is because of prices-the industry has seen more price-led growth rather than volume growth,” said an expert.

Experts say the industrial productions data shows signs of slowing consumer demand even though overall growth hit a 14-month high of 10.3% in August.

However, economists point out, urban consumption may support consumption demand. Real wage growth may also drive consumption, say economists.