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Consumer confidence declines again

Published on Sat, May 30, 2009 at 14:54 | Source : CNBC-TV18

Updated at Tue, Jun 02, 2009 at 12:01

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"A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so."

- Mahatma Gandhi

By Haresh Soneji, CNBC-TV18

Consumer is King. That's what we have grown up learning in B-school. And every strategy revolves around the consumer. Is the real world different though? If the answer is no, something seems to be going awry. The consumer is reacting very differently from the general sentiment upbeat in the economy. She/he is refusing to be influenced by the way the equity market is reacting to the election outcome. Despite improved sentiments on account of a stable elected government at the Centre, consumerism and consumer confidence continued to remain at low levels. This raises a question whether consumerism, as a lead indicator to the general state of the economy, is just for discussion in B-schools. Here's why?

The CNBC TV18 Boston Analytics Consumer Confidence Index fell 4.2% from 74.1 in Apr to its lowest levels of 71 in May. The index is the largest and most comprehensive index in the world derived from a monthly face-to-face interview of nearly 10,000 respondents across 15 Indian cities and small towns.

The CNBC TV18 Boston Analytics Consumer Confidence Index consists of two sub-indices - the Current Situation Index and the Future Expectations Index. The Future Expectations Confidence Index is now higher than the Current Situation Confidence Index for the fifth consecutive month, indicating that consumers are more confident on the future than the present. However, both the indices declined. The Current Situation Confidence Index recorded a 1.7% decline from 71.4 in Apr to 70.2 in May. The Future Expectations Confidence Index slipped 6.8% from 77.6 in Apr to 72.3 in May.