At the time when IMF is hoping that India can survive the global recession and emerge as the world’s fastest growing economy, another survey has come up highlighting the nation’s financial prosperity. Retail sales has grown by 6% in April says RAI (Retailers Association of India). This growth in 2023 is against the sales reported in April 2022.
According to Retail Business Survey by the industrial organization, retail sales in northern India showed slow growth, compared to the rest of India. The southern and eastern regions experienced a significant surge with a 7% year-on-year increase during the month.
The survey tracked various sectors, revealing that Quick Service Restaurants (QSR) experienced the highest growth at 16% in April, followed by food and grocery at 15%. Additionally, furniture and furnishings, as well as consumer durables and electronics (CDIT), reported annual growth rates of 14% and 9%, respectively, last month.
Retailers experienced a moderate increase of 6% in April 2023. This could be attributed to the significant surge of 23% in April 2022 compared to the pre-pandemic period in April 2019, as well as the remarkable growth of 41% in April 2022 compared to the sales level in April 2021.
According to retailers, the growth observed in April was built upon a strong foundation set by the previous year. Sales in the fiscal year 2022-23 experienced a growth of 34% compared to the sales figures in the preceding financial year.
Retail sales serve as a reliable gauge of economic health, revealing whether the economy is likely to grow or contract. They represent the measure of consumer demand for finished goods, making them a vital macroeconomic indicator.
Positive retail sales data often stimulates optimism in the stock market, benefiting shareholders of retail companies who can expect increased profits. A flourishing economy benefits everyone, while lower retail sales and a contracting economy typically result in reduced inflation.
However, amidst all the good indicators, some data is still of concern regarding the Indian economy. The demand for discretionary categories like clothing and electronics has been generally lackluster, while households have been burdened by high inflation, leading them to reduce their discretionary spending.
Increased inflation leads to a significant rise in the prices of various goods and services. Consequently, consumers tend to reduce their overall spending or prioritize essential items while making inflation-resistant purchases.
Retail sales has grown by 6% in April says RAI. While the growth rate is positive compared to April 2022, it remains to be seen if the number will reach double digits. We will need to wait for the upcoming months’ results to draw conclusive assessments.
Source: Retail Business Survey by RAI
