Rising vegetable prices catapulted the Consumer Price Index (CPI)-based inflation to double digits in October, after a gap of six months, even as normal monsoon is expected to yield a bumper crop this financial year. Retail inflation rose to 10.09 per cent in the month from 9.84 percent in September as the rate of price rise in vegetables surged to 45.67 per cent against 34.93 per cent over the period, showed official data released on Tuesday.
Thanks to an upbeat festive season in the months of October and November, apparel retailers are anticipating improved like-to-like sales growth. Like-to-like growth refers to the increase in sales from same stores in comparative quarters.
As the festive season hits its fag end from Dhanteras to Diwali, consumer durable firms and analysts have mixed views on buying sentiment. While they admit that cost pressures and inflation have impacted consumer sentiment, durable firms say some categories have seen good sales.
The government may widen the scope of foreign investment in e-retailing by allowing FDI in services such as selling of financial products and rail-ticket booking, in addition to transacting in goods.
This, according to officials, will be done only after a consensus is arrived at among the ministries and departments concerned.
Consumer companies’ earnings for the quarter ended September have ignited hopes of a revival in consumer demand in India. After decelerating for about two years, consumer goods makers reported higher growth in revenue and profits during the quarter. Growth in net sales for the 15 companies in our sample list rose 11.4 percent on a year-on-year basis in the September quarter, against 10 percent in the preceding quarter and 11.5 percent in the March quarter.
Shares of consumer goods companies fell on Monday, weighing down the benchmark indices, as investors booked profits after July-September sales growth fell below expectations.
It has been acutely visible over the last three years. Multinational companies in India, in the fast moving consumer goods (FMCG) space, have been able to deliver higher returns on investment compared to their Indian peers.
Be it Hindustan Unilever, Nestle or Colgate-Palmolive, with returns of over 95 per cent, 110 per cent and 150 per cent, respectively, on an average, these multinationals have been able to grasp more than an understanding of the regional nuances of the market and have delivered, and not just on the investment front.
Aggressive expansion in a difficult economic environment and delays in foreign investment are proving costly for the retailers. Spencer's Retail, part of the Sanjiv Goenka group, had looked to break-even targets by the second quarter of 2012, only to revise it to December 2013.
The retail inflation came in at a higher than expected 9.84 per cent in September. This is higher than the consumer-price-index (CPI) based inflation of 9.52 per cent recorded in August.
Retail inflation for rural and urban areas stood at 9.71 percent and 9.93 percent respectively in September. For the previous month, rural and urban area inflation stood at 8.93 percent and 10.32 percent respectively.
Sales growth for fast-moving consumer goods (FMCG) companies is likely to remain muted in the September quarter, as consumers remain unwilling to increase spending.