Feb CCI down at 77.6: Reasons for the decline

CNBC-TV18, in association with Boston Analytics, recently launched India's largest consumer confidence index. The CNBC-TV18 Boston Analytics Consumer Confidence Index is arrived at by conducting face-to-face interviews with nearly 10,000 respondents across metros, Sec A & B towns.

For the month of February, the index came down by 3% at 77.6. The index is down 22.4% since its inception in January 2008.

Also read: CNBC-TV18 Boston Analytics Con Confidence falls 3% in Feb

The key reasons for the decline in the CCI are: Weaker spending plans, declined job security, reduced comfort in borrowing by consumers and expectation of increase in interest rates. CNBC-TV18's Haresh Soneji analyses.

The gloom exists in Indian consumers mind too. The key number is down 3% at 77.6 and continously since the previous nine months this number has been declining.

The CCI is made up of two parts. It is the Current Situation Index, which is also negative and it is down month-on-month from 80 to 75.7 and one can see that consumers are not confident of the previous 12 months on what exactly is going on at present. And the Future Sentiment Index too seems to have stabilized at 77.8 - it is falling but at a slower rate.

So there is some bit of optimism that over the next 12 months the consumer may spend a bit more.

We have all been talking about interest rates declining going ahead but consumers think otherwise and 84% of the consumers believe that interest rate will remain flattish or increase in the next 12 months. So that is the key reasons why CCI is declining. Personal financial conditions are deteriorating, confidence in spending is down about 6% and things don't look nice up ahead for the short term at least.