Consumer sentiment improves after steep fall in April-May period: CMIE

The index of consumer sentiment has started improving since mid-May after witnessing a higher fall in rural India in April and May compared to urban India, the Centre for Monitoring Indian Economy said.

However, the recovery has a long distance to cover before it reaches its pre-second wave levels seen in February or March 2021 and much more to reach the pre-first wave levels, the CMIE said in its weekly labour market analysis.

“While April and May saw consumer sentiments come crashing down, it seems that a turnaround is also underway. The index was at 47.3 in the week ended May 16 and has since then clawed back some ground to reach 48.9 in the week ended June 13,” CMIE said, adding the turnaround though is hesitant and not uniform across rural and urban India.

As per the CMIE, the recovery in consumer sentiments is essentially playing out in rural India. After recording a low in the week ended May 16, the index of consumer sentiments has shot up by 11.4% for rural India while that for urban India fell by 9% by the week ended June 13.

CMIE data shows the cumulative fall in consumer sentiments in urban India during the months of April and May 2021 was 7.9% while it was much larger in the case of rural India at 17.7%.

“This much larger fall in consumer sentiments in rural India is in sync with the general view that the spread of the virus in rural India, the poor health facilities there and the lack of vaccines could have caused much larger damage to lives and livelihoods there,” CMIE added

Further, the cumulative fall in the index of future expectations in April and May 2021 was a substantial 16.9% while it was 7.3% for urban India, CMIE said.