Private Final Consumption Expenditure (PFCE) at current prices is estimated at Rs. 9, 96,630 crore in the quarter ended June 2010, which represents a healthy 26.5% rise from Rs 7,88,013 crore in the same quarter of the previous year. However, at constant prices, the PFCE has inched up by a mere 3.8% to Rs. 683794 crore during this period. On the other hand, Government Final Consumption Expenditure (GFCE) at current prices is estimated to have increased by 23.3% to Rs. 1, 95,316 crore in the quarter ended June 2010, from Rs. 1, 58,390 crore in the corresponding previous quarter. At constant prices, the GFCE has improved by 14.2% to Rs 144087 crore during this period.

Recent data have showed that the velocity of growth at constant prices has been higher in government consumption but relatively better at current prices in private consumption.

In April-July 2010 period, the growth in consumer durable production were powered by spike in production of alarm time pieces and strong growth in production of metallic utensils (excluding pressure cooker), AC Single phase house service meters, scooters and mopeds, electric fans, window type air conditioners, passenger cars, pressure cookers, motor cycles etc. By and large the momentum in the auto sector is powering the consumer durable segment.

In early September 2010, the prices of flat steel, including HR coil prices have been hiked by Rs 1000 per tonne in India. Based on daily prices, the average copper prices in Mumbai have hardened from Rs 302.30 per kg in June 2010 to Rs 356.74 per kg in September 2010 (till 20^th September 2010). But still, the pace of rise in copper prices have been decelerating sharply from whopping 118% spike in December 2009 to mere 14% rise in August 2010, but the pace has started accelerating, which were at about 18% in September 2010 (till 20^th September 2010).

Similarly, Aluminium prices in Mumbai have hardened from Rs 89.91 per kg in June 2010 to Rs 98.39 per kg in September 2010 (till 20^th September 2010). The pace of growth in prices fell from 46.59% rise on y-o-y basis in March 2010 to 5.3% in August 2010, but the pace recovered to 10.2% rise in September 2010 (till 20^th September 2010).

Other input costs, and freight have also increased in the recent times. But Indian rupee depreciated by 3.2% against US$, by 3.0% against Great British Pound and by whopping 8.6% against Japanese Yen in the quarter ended June 2010. On the otherhand, the rupee has actually appreciated by 1.9% against US$ between 30^th June 2010 to 21^st September 2010. During this period, Indian rupee continued to depreciate by 1.7% against Great British Pound and by 1.6% against Japanese Yen. Interestingly, rupee depreciated by 6% during the quarter ended June 2010 and appreciated by 5.1% since then through 21^st September 2010 against Japanese Yen. The appreciation of rupee against US dollar will help contain the landed cost of imports denominated in US$, for players importing components in Completely Knocked Down (CKD) or semi knocked down (SKD) condition.

In one month to 22^nd September 2010, the BSE Sensex rose by 8.3% to 19941.72, but the BSE consumer durable index under performed with mere 4.6% return during this period. Between 31^st August and 22^nd September 2010 too, the sector under performed with mere 9.6% increase, as against 11.0% return in BSE Sensex.

Outlook

The southwest monsoons is expected to be normal which, coupled with increase in area under crop, should help improve rural income. Increasing nuclear families due to accelerated urbanization is also powering demand for consumer durables. Sluggish global economic conditions are making imports, either in completely knocked down and semi knocked down (SKD) conditions, cheaper. Of late, rupee is appreciating, which will further bring down the landed cost of imports. The consumer durables sector is capitalizing on this by marketing the latest products in India, which is a witnessing healthy growth in demand.