ICRA has revised its forecast of the YoY domestic jewellery consumption growth in value terms for FY2024 to 10-12 per cent from 8-10 per cent estimated earlier. This, it said, will be primarily driven by the rise in gold prices.
The country's Jewellery consumption is estimated to have risen by more than 15 percent YoY in H1 FY2024, aided by stable demand during Akshaya Tritiya and higher gold prices. However, ICRA projects the growth rate to moderate to 6-8 per cent in H2 FY2024 due to sustained tepid rural demand amid persistent inflation.
After remaining volatile between December 2022 and April 2023, gold prices were relatively stable in H1 FY2024, although up ~14 per cent compared with the average prices in H1 FY2023. The elevated price levels supported revenue expansion of most jewellery retailers in the face of muted volume growth.
According to the ICRA report, the recent tensions in the Middle East and the evolving global macro-economic environment could keep gold prices elevated in the near term. The spike in gold prices since early October 2023 and persistent inflationary headwinds remain key risks to demand.
Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough & Polished
