MUMBAI (TIP): With reinforcing sentiment on job security and income recovering, consumer spending in India is likely to improve in coming few months, a study said.
According to ZyFin Research, a financial research and analytics company, Consumer Outlook Index data for January indicates that consumer confidence has improved from last year.
The ZyFin Consumer Outlook Index was at 46.6 in January 2015, which is 10.6 percent higher than last year.
The improvement in sentiment is primarily due to strengthening outlook towards job security and expectations regarding rising household income.
Also, inflationary expectations among Indian consumers have declined significantly, it noted.
“Close to 30 per cent of consumers surveyed, expected inflation to cool down over the next six months compared to 23 per cent who thought so in January 2014,” it said.
Consumer Outlook Index reflects current and future spending plans, employment and inflation outlook of urban Indian consumers. It comprises three major components, measuring consumer sentiment on spending, inflation and employment.
A score above 50 reflects optimism, while below 50 is an indication of pessimism.
“Although Consumer Outlook Index continues to remain in the pessimistic sub 50 territory, the steep rate of recovery observed in the data over last few months suggests that Indian consumers are growing confident and within a span of another 2-3 months the data should breach 50 level and start reflecting optimism.
Optimistic consumers are a key contributor to generate sustained growth in a domestic spending driven economy,” ZyFin Research chief economist, Debopam Chaudhuri, said.
The study noted that the sentiment is recovering quicker in smaller Indian cities than in metros.
“While the year-on-year growth in metro cities was 6 percent, it grew at 17 percent in smaller tier 1 and 2 cities, possibly due to prospects of an expanding manufacturing sector concentrated in these regions,” it said.
“As high as 38 per cent respondents in January 2015 were planning to buy a home within the next 6-12 months. 41 percent said they have plans to buy home appliances over the next few months. The comparable numbers were 33 percent and 35 percent, respectively, in January 2014,” it said.
Consumer Outlook Index is based on a monthly survey of 3,000 consumers in 11 cities across India.