Consumer sentiments improved by 9.8% for the week ended October 10 while the index of consumer expectations jumped by 10.4%. However, this is yet to translate into higher consumer spending as households continue to be cautious, the Centre for Monitoring Indian Economy said.

“Most of this extraordinary gain in consumer sentiments emanates from a jump in the expectation that the economy as a whole would do better in the coming one year and also in the coming five years,” the CMIE said in its weekly labour market analysis.

“However, expectations of this translating into better household incomes are still muted while there is only a small increase in the intentions to buy consumer durables,” it added. .

The mean weekly change in consumer sentiments has been 0.6% and the median 0.5% over the past one year though there has been a steady improvement since July. The index of consumer sentiments had scaled up by 7.9% in September, 1.7% in August and a massive 11.1% with the cumulative gain in three months since July at 21.9%.

Data shows the index of current economic conditions rose by 11.9% in September over its level in August while the index of consumer expectations increased by 5.7%. In the quarter ended September, the former increased by 29.8% while the latter increased by a lower 17.7%.

According to CMIE, the principal reason why the index of consumer sentiments improved in September is that more households reported that their incomes were higher than a year ago. As per its data, 8% of the respondents said so as against just 4.6% in August.

However, this improvement in household incomes had a rather marginal impact on household intentions to buy consumer durables with only 4.3% of the households reported that it was a better time to buy consumer durables in September 2021 compared to a year ago while more than 51% considered these to be worse times than a year ago to buy consumer durables.

“This is disappointing given that India is at the eve of its festive season,” CMIE said, adding this is an indication that an increase in income may be necessary but it may not be a sufficient condition for households to start spending.