India Data Talk: The quarterly Consumer Confidence Survey conducted by the Reserve Bank of India (RBI) seeks insight into consumer’s evaluation of the overall economic conditions and their financial situations. The survey compiles consumer confidence on a broad array of issues, including economic conditions, household circumstances, income, consumer spending, price level, employment conditions, interest rates, real estate prices, and economy growth potential. In addition to looking at the current situation (the present conditions compared with a year ago), the survey also examines consumer views on the future situation (expectations for one year ahead).
The latest survey results show that consumer confidence took a turn for the worse since the previous quarter. The Consumer Confidence Current Situation Index slid 1.38% in March 2012 and the Consumer Confidence Future Expectation Index dropped 3.91%, as compared with, respectively, 1.04% and 1.26% growth a quarter ago.
Consumer Confidence Index
Chart provided by: CEIC
In the March 2012 survey, consumer confidence on better current economic conditions fell drastically to 14.36% along with a 5.78% decline in the expectation of better future economic conditions. In terms of income increment prospects, 60.70% of respondents expected income increases in one year ahead, while 55.20% respondents expected income increases during the current period. In contrast, consumers showed stronger confidence in current spending than in spending in the future period. The net perception of current consumer spending rose 2.84% over the quarter to 61.5% in March 2012, while the net perception on future consumer spending sank 14.29% to 45% for the same period. In terms of employment conditions, the amount of respondents who are quite worried about their employment prospects has increased to 23.8% from 16% in the previous quarter.
Partly reflecting the slowdown of India’s gross domestic product (GDP) growth to 6.08% in December 2011 from 6.85% in the previous quarter, only 60% of all respondents, as compared to 64.9% of respondents a quarter ago, believe that the economy’s growth potential is above the current level. Meanwhile, 33% believe the economic growth potential is reflected at the current level and only 7% think the economy growth potential is below the current level.
Although consumer confidence in future expectations showed a deeper decline compared with the current situation, there remain some signs of improved consumer confidence for the future in terms of economy conditions and income increases. However, the present global economic uncertainties may continue to dampen consumer confidence.
By Chan Yee Lui – CEIC Analyst