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Discretionary demand on the mend in June-July; see full recovery in second half of fiscal year.

On both a year-over-year and sequential monthly basis, discretionary consumption has improved since June, according to the chief executives of numerous top publicly traded consumer corporations during their results calls for the June quarter.

They continued by stating that the demand recovery had accelerated further in July and that this increase was caused, among other things, by a slowdown in inflation.

They are optimistic that the economy will fully rebound in the second half of the fiscal year as holiday spending picks up. Venugopal G. Nair, CEO of Shoppers Stop, stated to analysts on Tuesday that sales improved in June and are continuing in the same direction in July.

He claimed that during the end-of-season sale that started in June, business increased. While April and May were quiet, June saw increase across all product categories, according to Anil Rai Gupta, chairman and managing director of electronic products business Havells India. In the second half of the year, he anticipates a recovery in demand for goods like wires, switchgear, and refrigerators, including in rural India.

In light of robust domestic investment, the International Monetary Fund (IMF) increased India’s GDP forecast for FY24 from 5.9% to 6.1% on Tuesday. Other high-frequency indicators that point to recovery include corporate debt issuance, manufacturing PMI, goods and services tax (GST) collections, and credit demand.

Also read, ITR Filing Last Date 2023: Consequences of Missing the Income Tax Return Filing Deadline

Decline in Discretionary consumption:

Since Diwali last year, there has been a decline in discretionary demand purchasing across all categories as a result of rising inflation, job losses in certain industries like startups and IT, and the macroeconomic environment as a whole.

Businesses in a variety of industries, including clothes, lifestyle retail, electronics, and quick service restaurants (QSRs), have reported a slowdown in activity since November or December of last year.

The demand for discretionary seasonal goods like refrigerators and air conditioners was reduced by a mild summer. According to the sector, this summer has been the worst for these goods in more than ten years. Retail inflation did, in fact, reach a three-month high of 4.8% in June, but it is still far lower than the eight-year peak of 7.8% it reached in April of last year.

United Spirits CEO Hina Nagarajan stated to analysts last week that consumption held steady in the June quarter. In a macroeconomic context that is otherwise unstable, India continues to be a shining example. She declared that the business is optimistic about this fiscal’s double-digit top line growth.

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