Covid fatigue gives way to pent-up shopping

Indian consumers are lapping up everything from cars, houses and television sets to travel and jewellery in the festive season that began last month, according to early data, giving a fillip to growth prospects despite economic gloom elsewhere in the world.

Online and offline sales during the Hindu festival period starting in the last week of September and lasting until early November are estimated to cross US$27 billion ($39 billion) - almost double the amount in the same pre-Covid period in 2019, and nearly 25 per cent higher than last year, according to industry estimates.

The sales would include nearly US$15.2 billion offline sales, compared to about US$8.5 billion in 2019, according to the Confederation of All India Traders (CAIT).

This year, there will also be US$11.8 billion worth of sales on online platforms like Amazon and Walmart's Flipkart, according to Redseer, a market consultancy.

Retail sales always peak during October and November, when the nation of 1.4 billion celebrates the major festivals of Dussehra and Deepavali. It's also an auspicious time of year to get married, according to the Hindu belief.

But the surge this year is much larger, mainly due to pent-up demand as Covid-19 recedes after two years as well as a rise in wages and an increase in jobs as the economy recovers, said industry leaders.

"After two years of pandemic fatigue, Indian consumers are upbeat ahead of the festivals," said Mr Sanjay Kothari, associate partner at Redseer, adding that online sales rose by nearly one-fifth in the first week of the season compared to last year.

With a four-fold rise in online buyers since 2018 to nearly 200 million, and demand for items like handphone and clothes spreading to small towns, such sales were likely to remain strong at least for next three months, he said.

"We had not gone out of the city since the outbreak of Covid-19 but decided to have some fun this year during the festivals," said Mr Manoj Kumar Das, a 53-year-old tea vendor in Bhubaneswar, the capital of Odisha.

Mr Das, who earns about Rs30,000 ($518) a month, said he spent more than Rs50,000 on a seven-day vacation, besides buying new clothes for his family this year.

Vehicle sales, including two-wheelers, rose 57 per cent during the nine most auspicious days in the Hindu calendar this month compared to last year, and were nearly one-fifth higher compared to the pre-pandemic period in 2019, according to the Federation of Automobile Dealers Associations.

In the country's top seven cities, home sales in the September quarter rose nearly 70 per cent from a year earlier, said a report by the JLL consultancy, as builders offered festival discounts.

The boom in India comes despite economic challenges elsewhere in the world, with broadening inflation in the aftermath of the Russia-Ukraine war and sharply higher interest rates.

Countries representing one-third of global output are expected to be in recession next year, the IMF has said.

In India, too, lending rates have gone up by about 150 basis points since May as the central bank acted to combat consumer inflation which hit a five-month high of 7.41 per cent year-on-year in September.

But economists said the sense in India was that inflation has peaked while economic activity was picking up. The bump in consumer demand is expected to support economic growth of around 6.5 per cent in the fiscal year ending March 2023 - the highest among the world's major economies.

Retailers in Delhi's Chandni Chowk cloth and jewellery markets, and in Uttar Pradesh, Gujarat, Odisha and Kerala reported a huge pick-up in demand, particularly in urban areas.

But rural demand remained weak due to lower wage growth compared to the cities, traders said, and possibly because of unseasonal rain this month that affected crops.

The retail boom is also a boon for the government - goods and services tax collections, a barometer of consumer demand, rose 26 per cent year-on-year in September, data showed.

Mr Praveen Khandelwal, secretary-general of the CAIT group representing over a million retailers, said sales were expected to grow around 70 per cent compared to the pre-pandemic period as people were spending more on clothes, gold and home decoration to celebrate festivals. They were also shopping for the wedding season.

"Consumer confidence has improved with expanding economic activities, and the country would be celebrating festivals without any fear of pandemic after two years," he said.

Reuters

"After two years of pandemic fatigue, Indian consumers are upbeat ahead of the festivals." - Mr Sanjay

Kothari, Associate partner at Redseer

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