MUMBAI: Indians are counting every penny they are spending—blame it on price hikes and inflation. Consumers are becoming value-conscious, trimming budgets for non-essential spends and curbing impulse purchases even amid the festive season when people typically tend to loosen their purse strings.From packaged consumer goods to gold and fashion, entry-level shoppers are the hardest hit, said industry executives. “The price increases have had an impact and the market is feeling it. When budgets tighten, households put necessities first and push everything else down the list. The slowdown is becoming visible now in mass markets and rural India,” said Umesh Kumar Agarwal, director at Haldiram Marketing. While consumers are not eliminating purchase decisions altogether, they are postponing them and impulse buying has certainly come down, said Anupam Bansal, executive director at Liberty Shoes.
Pressure building up
Data sets show that pressure has been building up on consumers since the start of the year as the war disrupted energy supplies, pushing up prices of fuel and LPG cylinders. A study released by Worldpanel by Numerator (formerly Kantar) on Thursday showed that overall grocery spending declined by 1% in the March quarter with the drop being sharper in rural homes at 5%.Urban quarterly expenditure declined 4% y-o-y, compared with 14% growth in the previous year. Consumer durables, though, gained share of wallet spends, helped by GST cuts.“Essentials are being protected, while discretionary purchases are facing greater scrutiny. Higher EMI outlays make short-term disposable spend even tighter,” said Manoj Menon, director, commercial worldpanel division.NielsenIQ’s (NIQ) recent June quarter snapshot showed that about 68% of FMCG categories have seen a decline in volumes, indicating that consumption has slowed down beyond core categories. The impact has been larger in categories such as washing liquids, detergent bars and toilet soaps. Overall volumes declined by 2% in the quarter.Rising input costs have weighed on magic price points (Rs 5 and Rs 10 packs) across categories, analysts at NIQ said. Companies across segments including FMCG and durables took more than one round of price hikes to cope with commodity inflation. Increase in crude prices has a direct bearing on packaging and logistics costs.Jayatheertha Chary, managing director at Mother Dairy, said that input costs continue to face inflationary pressure and the company will continue to calibrate its approach accordingly.“For us going ahead, the focus will be on affordability, distribution and availability rather than looking at price increases,” said Mayank Shah, chief marketing officer at Parle Products.
