3 But mass demand is still scarred
Index of Industrial Production (IIP) data for the month of March shows a divergent trend in the consumer goods sub-component and the rest of the IIP basket. While the former continues to contract, the latter has been showing expansion. This basically suggests that a large section of the consumer base continues to see demand destruction. What more can be said about this situation? Data from RBI’S Consumer Confidence Survey (CCS) can offer some insight into this question.
While the level of net consumer sentiment vis-à-vis general economic situation and prices is at a similar level (latest data is for March ) to where it was when inflation peaked (September 2013 and December 2013) in the last cycle, perception around income and employment is much worse for the present period. This suggests that the purchasing power of a larger part of the urban population – this CCS is only done in cities – could be lower today than what it was when prices peaked in 2013.