Investors who closely monitor Hindustan Unilever Ltd.’s profits for a pulse on Indian consumer demand would be shocked to see the decline in industry-wide volumes for the company’s primary product categories of food, personal care products, and cleaning solutions.
It’s not new. India’s consumer demand has been falling since August 2021. Even when the spike in hospitalisation and mortality subsided, village households were not in the mood to spend because many of them had to sell their gold holdings and other possessions to treat Covid-19 patients that summer.
Sanjiv Mehta, the CEO, declared in a statement following the earnings report from last week that the worst of inflation is behind us. Indeed, it appears that this is the case. In December, the third consecutive month of cooling, India’s overall price index increased 5.7% slower than anticipated. A significant employer in metropolises, India’s software exports sector has been cautious about hiring due to the slowing of global growth.
Source: ET Now
The surge in demand that followed the recovery of the economy following the pandemic has peaked. The largest decorative paints manufacturer in India experienced no volume growth in the quarter ending in December. That may be partially attributable to the late monsoon rains that caused people to put off painting their homes. Then again, it can also be a return to caution.
Super-luxury cars, which have an annual market of approximately 450 purchasers who can afford to spend out of their money on a Maybach or Bentley costing more than $250,000 apiece, are where India’s truly unrestrained consumption growth can be seen. The majority of people who have no or little net worth must pay for their purchases of tea, cookies, and shampoo from the portion of national income that they are legally entitled to.
That may not happen this year due to a worldwide slowdown and domestic economic restraint, so the nation’s highly innovative advertising business may have to fight hard for a share of the tight household budget. There will be some room for further spending, particularly in villages, as the inflation from last year begins to decline. Nonetheless, the attitude towards consumption in urban areas can stay muted.
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