Consumer sentiment has increased significantly as public mobility exceeded pre-pandemic levels and unemployment levels went down
Consumer sentiment has increased significantly as public mobility exceeded pre-pandemic levels and unemployment levels went down
In the first week of September 2020, India recorded an average of around 80,000 daily COVID-19 cases. A year later, around 40,000 new cases were reported daily in the same period. In both these years, the festival season was suppressed due to the pandemic and related restrictions. The pandemic disrupted mobility. Even some people who did venture out had low consumer confidence and delayed their big purchases between September and December, a period usually associated with a shopping spree. Also, in 2020 and 2021, a few months before the start of the festive season, the unemployment rate skyrocketed. This means that the purchasing power of the consumers is reduced. This affected the sales of vehicles. Air travel was also affected due to restrictions and poor demand. With most offices closed or employees working from home, the festive season has come and gone without much fanfare.
In 2022, things have taken a turn for good. Daily cases are hovering around 7,000. And with mobility improving to reach pre-pandemic levels, people are joining in.revenge shopping‘ (Fantastic purchases that follow a period of frugal spending) due to pent-up demand. People are also traveling a lot, which is reflected in the number of domestic travelers in recent months. apart from this, unemployment level has reached the lowest level in 45 months.
chart 1 Shows Google Mobility Index during the pandemic period. It measures visits to different locations by keeping the baseline as a five-week period from January 3 to February 6, 2020. A positive value indicates an increase in visits from the baseline period and a negative value indicates a decrease. In 2020, visits to retail and entertainment centres, parks and transit stations remained well below baseline prices. In 2021, while the dynamics was better, it mostly remained below the average price. However, in 2022, from the last week of September to the first week of October, park visits were between 60% and 80% compared to baseline. Similarly, visits for retail and recreational purposes increased by 10%-20%.
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In September 2022, CMIE’s Consumer Pyramid Household Survey asked households about their financial status and their ability to purchase items such as furniture, television sets and cars compared to a year earlier. The results were shown as the Consumer Sentiment Index. chart 2 (Base period: September-December 2015 = 100). The score was 80 in September 2022, significantly higher than 54.7 in 2021 and 42 in September 2020. Therefore, consumer sentiment has increased significantly in 2022.
The number of air travelers is also rising to pre-epidemic levels ( chart 3) In August 2022, more than 10 million passengers flew in domestic flights in India. Only 28 lakh passengers flew domestic flights in August 2020. And in 2021 this number reached 65 lakhs, but in August 2019 the number was still half (1.2 crores).
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Data from the Federation of Automobile Dealers Association of India shows that after two encouraging festivals, vehicle sales in the 2022 season have exceeded pre-pandemic levels as shown below. chart 4 , Between 26 September and 5 October (Navratri season), the sales of vehicles in 2022 reached around 5.4 lakhs. In 2021 and 2020, these figures were 3.4 lakh and 4.2 lakh respectively. In 2019, 4.66 lakh vehicles were sold during this period.
Furthermore, unemployment was only 6.4% in September 2022, the lowest in the last 45 months as shown Chart 5.
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