Inflationary pressures make Indians spend less: BCG

Inflation continued to play an important role in consumer spending indicating that buyers in India are likely to become more selective this year, according to a report by the Boston Consulting Group (BCG).

"Mostly the metros and the middle income groups are driving the downbeat spend intentions. Inflation, which impacts daily decisions of consumers, is shaping the overall perception of the economy and their attitude towards spending," BCG Mumbai Partner and director Abheek Singhi told reporters here after releasing the study 'Winning Indian Consumers in 2011'.

The study points out that Indian consumers plan to cut spending and change habits to suit the 'new normal'.

Spending in sectors like apparel, durable, personal care products, accessories and leisure are the most affected. At the same time, Singhi said, 75% of the Indians surveyed remained optimistic about the future of the economy and deferring major expenses that can wait for some time.

"The vast Indian populace wants bigger cars, larger televisions and better grooming products and will spend even more on these, as soon as the daily vagaries of inflation come under control," it said.

The economic slowdown has also resulted in a clear shift back to the basic values like family, home, education, savings and wealth status, it pointed out.

The average Indian is trading up for the right reasons which is evident on rising spend on health insurance and health care facilities, it said. High end hospitals and diagnostic centre in India are seeing more traffic than ever due to growing awareness amongst masses.

Categories like dairy, fresh food, laundry, detergents, vitamins and supplements, juices, kids clothing continue to be important, the report said.