As the delayed monsoon hampered the kharif sowing schedule and dampened consumer sentiment, the country’s average wage rate declined by 1.5% in July. This was the fifth monthly decline in the 12-month period ending July. 

Data from the Centre for Monitoring Indian Economy (CMIE) show that the real wage rate fell by a substantial 5.7% in the three months ending in July this year, as the consumer price index (CPI) grew sharply by 2.7% during the same period. Real rural wages declined by a substantial 8.9% compared with 1.9% in urban areas.

In May this year, the average wage rate had fallen 2.5% and recovered to a weak 0.8% in June and then to 1.5% in July. As a result, the wage rate in July was 3.25% lower than it was in April this year, marking the worst three-month performance in three years.

“The wage rate has declined twice in the last three months and as result, the recent three months have been particularly stressful on the wage front,” Mahesh Vyas, MD & CEO, Centre for Monitoring Indian Economy wrote.

In July, the average wage fell 1.9% in urban areas and a lower 0.9% in rural areas. However, between April and July this year, the average wage in rural areas fell 6.25%. The CPI in rural areas rose 2.9% as compared with 2.4% in urban centres during the same period. 

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The average monthly rural wage rate fell from Rs 21,250 in April to Rs 19,922 in July. During the same period, the urban wage rate increased marginally from  Rs 32,078 to Rs 32,225.  

The average rural wage rate in July fell to Rs 19,922 a month from Rs 21,250 a month in April. In contrast, in urban areas it grew to Rs 32,255 a month in July from Rs 32,078 a month in April. “Because of the divergent movement, the disparity in the two has widened from rural wages being 66% of urban wages to just 62%,” the note says.