Retail Sales Hold Steady In August As Food Inflation Squeezes Budgets
However, retailers are expecting "double-digit" growth in the coming months, says RAI chief.
The pace of retail sales remained unchanged in August as compared with July, indicating that consumers wary of inflation are prioritising spending in the run-up to the festive season.
The country's retail sales grew 9% in August over the same month last year, according to data from the Retailers Association of India.
The sequential data indicates that high food inflation is squeezing budgets for many households, forcing them to reduce spending on big-ticket items like appliances and electronics. As a result of this, retail sales growth has seen only a modest increase of 6–9% in the last five months.
Retailers, however, are foreseeing "double-digit" growth in the coming months as the festive season approaches, according to Kumar Rajagopalan, chief executive officer of the association, which represents six lakh establishments across the country.
"It looks as if consumers are going out for shopping... In order to understand the complete impact of the festival season on retail sales, it is essential to see the figures for September, October, and November."
Leading the rise were quick-service restaurants, jewellery, and food and groceries, the RAI data showed.
The beauty and personal care segment grew 10%, while sales of sports goods rose 9%. Other categories, such as furniture and furnishing, consumer durables and electronics, apparel, and footwear, grew in the range of 5–8%.
The August retail sales data shows that the buying activity was more intense in the southern part of the country due to a good number of 'Muhurtham' days in August, weddings, and the festival of Onam, which started on Aug. 20 and lasted till the end of the month.
The RAI data showed that sales in south India grew by 15%, followed by the west (8%), east (7%), and north (6%) regions.
Several retailers that BQ Prime spoke with remain anxious as festive sales of apparel-to-appliances are yet to pick up. However, they are optimistic about the second phase of the season that centres around Dussehra and Diwali, during which most of them expect a 40–50% increase in sales.