Jewellery consumption will increase in the current financial year, agency increases estimate by 12 per cent

In value terms, jewellery consumption is expected to grow by 10-12 per cent in the current financial year. The main reason for this is the increase in gold prices. Rating agency ICRA has raised its forecast for year-on-year domestic jewellery consumption growth (in value terms) to 10-12 per cent in FY 2023-24 from 8-10.

It is estimated that in the first half of the financial year 2023-24, jewellery consumption will increase by more than 15 per cent on an annual basis. The rating agency also believes that due to continued sluggish rural demand amid inflation, the growth rate of jewellery consumption will decline to 6-8 per cent in the second half of the next financial year.

The report said that sharp fluctuations were recorded in gold prices between December 2022 and April 2023, whereas gold prices remained relatively stable in the first half of the current financial year. However, when compared to the year-ago period, prices are 14 per cent higher. The report said that due to the increased prices, the revenue of jewellery sellers has increased.

Due to ongoing tensions in West Asia and free trade agreements with other countries, gold prices will remain high in the near term. The report said that rising gold prices and continuously increasing inflation from the beginning of October 2023 are emerging as disruptions to demand.

ICRA Vice President Sujay Saha said that the revenue of jewellers in the organized market could expand by 15-18 per cent in the current financial year. Organized jewellery retailers are expected to perform better during this period. Big jewellers have announced the expansion of their retail network. It is believed that during the current financial year, it can increase the number of its stores by more than 20 per cent.

Due to high domestic prices, there has been a sharp decline in the demand for gold in other Asian countries including India. Due to a decline in demand, wholesale traders are being forced to give discounts. However, demand continues to rise in China. Harshad Ajmera, Kolkata-based wholesaler and JJ Gold House said demand traditionally remains weak during this period. Except for some states of South India, the situation is the same in the entire country. Price fluctuations have also weakened demand.