Will it be yet another bleak and bland Dussehra, Pujo, Navratra and Deepavali? Considering the rising prices yet again and inflation continuing to remain above the 8 % mark for 20 consecutive months, this could be yet another difficult time for the average Indian households. Festivals in India hold a lot of buying potential, not just that people make festival related purchases, a lot of big ticket purchases like fridge, TV, cars and others get postponed to the festival period. Festivals in India also symbolize new beginnings, so new businesses are initiated in this period. With not just inflation on the rise, but expectations of inflation[i] touching all-time highs, there is limited reason for enthusiasm among the common masses.
Dip in planned air travel, fall in gold purchases are some of the leading indicators of what is to come this festival season. Caution is the key word with people preferring to not just spend less but also postponing any planned purchases. Hardening of interest rates make matters worse for households as borrowing power falls and personal loans are tough to come by. Festival times are of particular interest to the low income groups whose propensities to consume rise the maximum in such periods. Inflation shrinks not just their buying power but also their dreams. The bottom of the pyramid[ii] whose purchasing power has driven FMCG profits in the last few years may now contribute much less. Are these signs of a sticky patch or is it a meltdown for the festival season in India?
Does news of inflation set in fears or solidify concerns we have always had? Is there a silver lining to this phenomenon? Do you see something different?
Posted by Archana Pillai
[i] RBI’s survey on inflation expectations is averaged well above the actual inflation figures. People are anticipating inflation and adjusting for it well in advance.
[ii] Phrase popularized by Prof C K Prahalad in his famed “Fortune at the Bottom of the Pyramid” to describe the poorest sections in an emerging market and the need to harness their latent buying potential.
