New Delhi: Indian consumers' confidence level rose in the month of May owing to improved spending behaviour coupled with easing inflation, says a study by financial services provider BluFin.
BluFin's Consumer Confidence Index (CCI) rose to 41.4 points in May, an increase of 3.4 points since the beginning of the year.
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.
The two key components of the CCI indicated improvement in the consumer sentiment.
A sub index, which rates inflation sentiment, rose from 23.9 points in January to 26.8 points in May, while the spending sentiment improved from 28.3 points to 30.5 points in the same period.
However, pessimistic views on employment, continue to be a small drag on the the consumer confidence index. The employment sentiment declined to 50.2 points in May from 51.4 points at the beginning of the year.
Nonetheless, the score itself is encouraging as it is above the benchmark level of 50.
Another sub-index, which measures future expectations was at 40 points, indicating consumers were still pessimistic about the economy's prospects. However, consumers were more comfortable about their present situation with a score of 46.
In terms of region, consumer confidence in North India registered a rise of about two points to 39 points in May, after a steady decline since January 2013.
"North Indian consumers, who have been the most sensitive to economic vagaries in the recent past, have been showing increased propensity to spend. This makes the North India numbers a lead indicator of an impending turnaround in overall consumer sentiment in India," BluFin CEO Rashid Bilimoria said.
"A key driver for this improvement is declining pessimism about inflation among consumers leading to a rising expectation of a rate cut," he added.
The survey has shown consumers in the eastern region of India to be the most pessimistic while those in the southern states to be the most optimistic, with cities such as Bangalore generally scoring above the benchmark level of 50.
The index is based on nation-wide monthly surveys of 4,000 respondents across 18 cities conducted by custom market research company TNS.