High impact on inflation: American and European buyers are looking for cheaper goods
Synthetic leather shoes and bags are increasingly replacing natural leather goods in export orders from Indian suppliers, as they are up to 35% cheaper than the original. As buyers seek lower export prices for garments, demand has risen for lab-grown diamonds, which cost less than half of natural diamonds.
“The trend is seen in gemstone and jewellery, textile, cosmetics and other industries,” said Ajay Sahai, chief executive of the Federation of Indian Export Organizations (FIEO). “So what we’re seeing is that low-value products are seeing good traction.”
Recession concerns weigh on consumer confidence
“The trend this year for exports will be high volume but lower value products,” Sahai added.
Half a century of high inflation in the eurozone led the European Central Bank to raise interest rates by three-quarters of a percentage point last week from zero and warn of further rate hikes . Recession fears are also high and are weighing on consumer confidence. The bloc’s big four economies – Germany, France, Italy and Spain – have all had their 2023 growth forecasts cut by the International Monetary Fund, rising interest rates and uncertainty over the the Russian-Ukrainian war being the main reasons.
In the UK, inflation is above 10% for the first time in 40 years. In the United States, inflation in August was firmer than expected, with the consumer price index rising 0.1% from the previous month.
High inflation weighs heavily on consumers’ pockets, forcing them to cut spending, especially on discretionary items. This is reflected in the orders of Indian exporters from their biggest markets.
“The other day, one of my members, who exports shower gel, informed me that he had received an order for 1,00,000 bottles of shower gel, but the buyers are asking for a price of 20 dollars. Previously , he was selling shower gel for $30 a bottle,” FIEO’s Sahai said.