Consumption trend uneven on high prices, but industry upbeat

economictimes.indiatimes.com:

inflation impacts discretionary spends of the middle-class even as there is an uptick in the spends by upper middle class consumers on premium cars, home renovation, real estate purchases, travel, hotels, tech goods. Inflation has impacted the middle-class consumer's buying power for small cars, and yet there is a long waiting period for high-end cars in 2023, say carmakers. «We might see some transitory loss in consumption due to high food inflation, but this will reverse soon as food inflation subsides as fresh kharif harvest hits the market,» said R Dinesh, president, CII and vice-chairman, TVS Supply Chain Solutions.

While the consumption recovery remains uneven, there is hope for lower income group as the economy gains growth, he said. India's retail inflation, measured by the consumer price index (CPI), rose to a 15-month high of 7.44% in July 2023, from 4.81% in June this year, according to the latest data from the ministry of statistics and programme implementation. Corporates say inflation will decelerate to 5.5% in 2023 as global commodity prices moderate and slower currency depreciation reduces imported inflation.

With the current rising commodity prices and increasing inflation, the cost of acquisition especially for small cars, which Maruti Suzuki is the market leader, has increased significantly during the last few years and become unaffordable. Higher costs have severely impacted the buying pattern for a section of buyers. Demand is upbeat for premium vehicles as consumers end up buying bigger cars which are technologically superior," said RC Bhargava, chairman Maruti Suzuki.