New Delhi: Indian consumers' confidence level rose in November owing to increase in spending due to festive season as well on expectations of improved job security, says a study by financial services provider BluFin.
The BluFin's Consumer Confidence Index (CCI) grew by 3.4 points from the previous month to 41.6 points in November despite inflationary concerns. This was the highest increase since October 2011.
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.
"... Increase in the CCI is noteworthy as it indicates Indian consumers' upbeat response to the ongoing festive season. The rising score since past two months and the slight uptick compared to the previous year could be an early sign of the consumer sector eventually bottoming out and making way for a recovery," BluFin CEO Rashid Bilimoria said.
"However, the current positive trend will be validated provided this upward pattern persists in the coming months. Moreover, it's important to note that the inflation sentiment index continues to trickle reaching to the lowest level in the last two quarters, hence, slowing the overall progress of the CCI," he added.
A sub index, which rates spending sentiment, improved by by 1.8 points to 26.9 in the month of November. The uptick in the index is primarily due to the festive season that generally encourages consumer spending. Nevertheless, the level still indicates that consumers are quite pessimistic.
Another sub-index, which measures employment sentiments, grew by 1.2 points to 43.4 owing to an improvement in job security outlook and household income. However, the index still suggests pessimism, which can be improved only by new job creation.
The future expectations index was at 38.7 points indicating consumers were still pessimistic about the economy's prospects. However, consumers were more comfortable about their present situation with a score of 48.6 points.
In terms of geography, west and south regions lead the consumer confidence levels with scores of 44.2 points and 35.5 points respectively.
The study was based upon interview of 4,000 urban consumers in 18 Indian cities, including metros and smaller cities.