Thursday, February 7, 2013

Urban consumer confidence level slips in Jan

Concerns over spending behaviour and worries about employment prospects dented the confidence of urban consumers in India in January, says a study by financial services provider BluFin. Consumer Confidence Index (CCI) slipped by 1.8 points to 38 in January over the previous month reflecting "no impact of proposed economic reforms (by government)." The index is a key 'aggregate' indicator that assesses the pulse of urban Indian consumers with regard to the economy, spending behaviour and employment. It reflects pessimism at below 50 score and optimism above that.The study is based on the interviews of 4,000 urban consumers in 18 Indian cities, including metros and smaller cities. Suggesting measures to arrest the falling consumer confidence, BluFin CEO Rashid Bilimoria said, "The CCI trends are signalling the urgent need to instill confidence again among consumers through policy reforms aimed at improving economic growth conditions." "With Inflation moderating, hard-hitting policy reforms aimed at restoring growth momentum would be the only recourse for improving employment and income conditions thereby lifting consumer sentiment," he added. A sub index, which rates employment sentiment, has reflected increased pessimism about employment across the country. The employment sentiment weakened by 0.5 points to 43.9 points in January. Similarly, the index which measures spending behaviour witnessed a decline in the period under review by 0.5 points to 24.3 points, suggesting consumers are highly averse towards discretionary spending. "The major factor contributing to the fall in spending was the rising discomfort about borrowing witnessed in Indian consumers. This is a gauge for measuring consumer willingness to spend on discretionary goods backed by bank credit," the report noted. "The prolonged high inflationary period has had an eroding effect on disposable income and its impact on demand would persist for some time. Rising pessimism around employment conditions reflects the prevailing economic growth woes faced by the country," it added. Another sub-index, which measures future expectations was 34.7, indicating consumers were still pessimistic about the economy's prospects. Although, consumers were more comfortable about their present situation with a score of 46. However, consumer sentiment on inflation rose by 0.7 points to 23.9 points.

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