Urban consumer sentiment at a 60-month high; rural areas less optimistic

Urban consumer sentiment reached its highest level since July 2019.

The Centre for Monitoring Indian Economy (CMIE) Index of Consumer Sentiments hit a 60-month high for urban India in June. It was a six per cent increase from the previous month and outperformed rural areas. 

The index is calculated based on responses to CMIE's Consumer Pyramids Household Survey. It takes into account the conditions of households, their expectations and their propensity to spend on consumer goods.

The overall all-India index has declined 0.3 per cent, because of the weakening in rural areas. Rural consumer sentiment is at its lowest level in FY25. It is down 3.8 per cent over May.

Overall consumer sentiment is slightly higher than it was before the pandemic. While the urban index of consumer sentiment is lower than it was in June 2019, the rural index inched by 3 per cent. The overall index is also up by 2 per cent in June 2024, compared to the same period in 2019.

Consumer sentiment recovery is uneven across all the income groups in the country. The lowest income segment, those earning less than or equal to Rs 1 lakh annually, have shown a decline of 0.4 per cent in consumer sentiment as of June 2024, compared to June 2019. Similarly, those earning between Rs 1 lakh and Rs 2 lakh per annum, experienced a sentiment fall by 3.8 per cent. The income group between Rs 2 lakh and Rs 5 lakh annually struggled with a decline of 1.2 per cent. Those earning between Rs 5-10 lakh per annum were the only income group to experience an increase. The highest income group- earning more than Rs 10 Lakhs, however, still remain the furthest apart, in terms of where they were in 2019. 

Income expectations for a year later had a net 24.5 per cent of the families anticipating improved conditions for their household, compared to the previous year. The net number reflects the difference between the share of those anticipating a better future minus the share of those expecting a worse situation in the future. A net figure of 21.74 per cent of rural households expect better days a year from now. The figure is 30.13 per cent for urban households.