Consumer confidence slips in urban India: BluFin

Concerns over rise in prices of essential commodities and worries about employment prospects have dragged down the confidence of urban consumers in India this month, says a study by financial services provider BluFin. BluFin's Consumer Confidence Index (CCI) slipped by 2.9 points from August to 36.7 in September. This was the biggest month-on-month decline to date.

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.

"The overall CCI has declined indicating that consumers remain gloomy about the economy and its prospects, inflation sentiment has become more pessimistic indicating that consumers are worried about prices of basic necessities and, finally, the one relatively bright aspect of the survey over the last one year, overall employment sentiment, has become more pessimistic, and that is a worrying sign," BluFin CEO Rashid Bilimoria said.

"It is also important to note that this month's CCI does not include consumer reactions to the diesel price hike, so overall I expect consumer sentiment to dampen even further going forward," he added. A sub index, which rates employment sentiment, has reflected increased pessimism about employment across the country. The employment sentiment continued to slide, falling to 42.9 a fall of 3.1 points over August.

Similarly, the index which measures spending behaviour witnessed a decline in the period under review by 2.2 points to 24.3 points, suggesting consumers are highly averse towards discretionary spending. "The sub index (spending) tracks spending lans on basic necessities and discretionary products such as durables, two and four-wheel vehicles and home purchases. There has been a significant decline in spending plans on discretionary products while expenditures on necessities has been going up primarily due to rising prices," the study noted.

Consumer sentiment on inflation, at 24.2 in this month has declined by 2.1 points from August. Another sub-index, which measures future expectations was 33.7, indicating consumers were still pessimistic about the economy's prospects. Although, consumers were more comfortable about their present situation with a score of 44. Among the cities, Mangalore and Hyderabad are the most upbeat cities, while Nagpur, Patna and Ludhiana are the most pessimistic, the survey said.