Retail Sales Growth Slows In December Amid Omicron-Led Curbs
Retail sales growth slowed sequentially in December as concerns about the rapid spread of the Omicron variant of coronavirus kept shoppers at home, amid fresh curbs imposed to combat the third wave.
Sales grew 7% in December 2021 compared to December 2019 or pre-pandemic levels, showed the monthly retail business survey released by the Retailers Association of India. However, it fell from 9% in November and 14% in October—a sign of uneven recovery. December is usually considered a high-sales month for the retail sector.
“Business was on a steady growth trajectory during most of December, but the pace of growth was seen as dropping off significantly towards the last week of December, due to the fresh set of curbs imposed in most parts of the country," Kumar Rajagopalan, chief executive officer at Retailers Association of India, told BloombergQuint.
The impact was more visible in discretionary spends for categories such as beauty, wellness and personal care. Sales in the segment fell 7% in December after growing 3% in November. Furniture and home furnishing also reported a 5% dip in sales compared to the pre-pandemic sales in December 2019, the survey showed.
Spending on consumer durables, apparel and clothing, and sports goods, too, fell. Consumers, however, spent more on quick service restaurants, food, grocery and footwear. Jewellery sales also rose during the month on the back of the wedding season.
Impact To Be Largely Muted
The third wave is rapidly spreading with new cases rising to nearly 1,68,000 on Tuesday, although death rates remain low. Yet, economists said that the adverse economic impact of the third wave should be muted in comparison to the previous two waves, even as services will take a larger hit.
“Voluntary pullbacks and restrictions such as night curfews and on-contact intensive services are starting to bite, as evidenced by the fall in mobility and airline traffic,” Nomura economists Sonal Varma and Aurodeep Nandi wrote in a note on Jan. 10.
The Nomura India Business Resumption Index, a weekly tracker of the pace at which economic activity is normalising, fell sharply to 109.9 for the week ending Jan. 9, from 119.8 during the prior week.
The drop was largely due to a 50 percentage point weekly fall in the Apple driving index. The Google retail and recreation mobility index dropped 5.6 percentage points, while workplace mobility slipped 0.7 percentage points.
The labour participation rate inched down to 40% from 40.6% in the prior week, with the unemployment rate up by 0.7 percentage points to 7.3%, said Nomura. The index is now 10 percentage points above pre-pandemic levels.
East India Sees Steepest Fall
Retailers in east India reported the steepest decline in business with six percentage points drop in sales month-on-month, according to the survey.
Those in the western part of the country saw business plunge by 2 percentage points to 9% in December, while retailers in the southern region saw a 1 percentage point dip.
North India, however, reported a 4 percentage point sales growth in December to 10%.
The association, Rajagopalan said, has appealed to the Ministry of Home Affairs and the Ministry of Health and Family Welfare to instruct states to refrain from imposing restrictions based on positivity rate, and instead consider hospitalisations as the criteria to determine the severity of restrictions.
“Doing so will avoid unnecessary panic among citizens and businesses while minimising the impact on livelihoods,” he said.