Consumer confidence down: Save, not spend, is the mantra

Consumer confidence has taken a hit in the month of September, according to the CNBC-TV18 Boston Analytics Consumer Confidence Index, which slipped by 1% in the month compared to August. CNBC-TV18's Haresh Soneji reports.

Below is a transcript of Haresh Soneji's report on CNBC-TV18. Also watch the accompanying video.

The disconnect is on the spending pattern of the consumers. There are people talking about that there is a buoyancy in India's manufacturing numbers, the government stimulus is helping etc but consumers are not spending. They are actually saving more from the various consumers that we asked across 15 cities and more than 10,000 face-to-face interviews we do for this index.

The buoyancy in the economy is back due to government spending, the consumer offtake on the finance activities, the consumer borrowing is still very sluggish and that's why probably there is a disconnect. But it's improving on a month on month basis, the index is flattening out and that's why consumer confidence index this time around is just down by 1%.

Even if you look at the festive season comparisons versus last year, the optimism level to spend on consumer durable items and other goods items was close to about 60-65% and this time around its just about 19-20% which is clearly on the pessimist zone. Consumers want to save more and not spend at this point in time. We are witnessing that the savings component of this index is being rising consistently yet. Inflation is hitting them and that's why they are spending more on the basic necessities. Food articles are increasing and that's why the spending on that is increasing.

On the whole though, the consumer wants to save at this point in time and that's very evident from the current situation confidence numbers too, which fell 0.7% and also the future expectations index, which feel steeply by 2% to 64.4 levels and all these things suggest and all the indices.

The sub indices are at their lowest levels this time around. We started tracking the index since January of 2008, so close to about 20 months in the index and we are at an all-time low, so that is what the consumer confidence data is suggesting at this point of time.