Private Consumption in India Rises by 12.4% with Increase in Discretionary Spending

A continued momentum in consumer discretionary spend, coupled with the beneficent price effect, sent private final consumption expenditure in India surging by 12.4 per cent for the April-June quarter of this fiscal, against 8.1 per cent during Q1 FY24, a report said on Wednesday.

In real terms, private consumption has increased by 7.4 per cent, higher than the GDP growth, said the report by Bank of Baroda. "The disaggregated production IIP and price CPI data showed that demand for durable goods is on a strong wicket. This is further supported by moderation in prices," the report said.

Among major segments, sales of AC and refrigerators posted a strong double-digit number. The quarter also coincided with worsening heatwave conditions and a warmer summer. AC sales picked up by 37.8 per cent in Q1 FY25 compared to -17.5 per cent in the same period of the previous year.

Other white goods such as TV, mobile phone sales too have picked up, which generally do not show the seasonal trend in Q1. A softer inflation rate for these items has also contributed to an increasing demand for these items," the report mentioned.

Inflation moderated for all these durable goods items, except AC. Notably, production numbers also got a boost from a favorable low base.

It also said that some categories of non-durables reflected an improvement in Q1. These include detergent powder, shampoo, and instant food amongst items of daily consumption. However, some items are lagging behind.

This may be due to a shift in consumption behavior. For example, sales of biscuits and bread have been witnessing a decline for quite a few episodes. This may be on account of consumers moving to healthier bites," the report said.

For instance, RO Cashews Salted Roasted recorded 43.1 per cent increase during the same period compared to -19.8 per cent during the same period last year.

Going ahead, the green shoot of rural demand is already visible. The monsoon is progressing well and so is sowing. "Food inflation shows a downward correction in August that would be reflected in the coming prints. This coupled with the early arrival of festivals will further provide consumption demand the desired impetus," the report noted.