Despite being in the slightly pessimistic range, consumer sentiment is showing some signs of improvement, suggesting a possible reversal in consumer mood
Consumer confidence levels rose in March on the back of improved spending behaviour coupled with stable employment situation, as per a study by financial services provider BluFin.
The BluFin's Consumer Confidence Index (CCI) rose to 41.8 points in March, an increase of 1.1 points from the previous month.
This is the first time since the festive season in November that the index has shown a rise. Despite it being in the slightly pessimistic range, consumer sentiment is showing some signs of improvement, suggesting a possible reversal in consumer mood.
The index is a key ‘aggregate’ indicator that assesses the pulse of urban Indian consumers with regard to the economy, spending behaviour and employment. The index reflects pessimism at below 50 score and optimism above that.
“It is interesting to note that there has been a marginal improvement in the consumer confidence in the metros and tier I and tier II cities,” BluFin CEO Rashid Bilimoria said.
“In the metros it’s the rise in the spending sentiment that has affected (improved) the consumer confidence whereas in the smaller tier I and tier II cities, it is the improvement in the inflation sentiment, which is the main reason for the upturn,” he added.
A sub index, which rates spending sentiment, has improved by 2.7 points to 30.2, indicating that the consumers are getting slightly less pessimistic towards spending.
“The improvement in these fundamental macro economic variables has reflected in the spending sentiment of the consumer as well,” the study noted.
The inflation sentiment index after having remained below 25 for some time has now risen to 25.9, showing growing comfort around inflationary pressures.
Besides, employment sentiment remained stable at 51.7, indicating a positive sentiment amongst consumers regarding their job security and job prospects.
Another sub-index, which measures future expectations was at 40.5, indicating consumers were still pessimistic about the economy's prospects. However, consumers were more comfortable about their present situation with a score of 44.7.
The index is based on nation-wide monthly surveys of 4,000 respondents across 18 cities conducted by custom market research company TNS.