New Delhi: Indian consumers' confidence level rose in June on the back of easing inflation but concerns remained over job security, says a study by financial services provider BluFin.
BluFin's Consumer Confidence Index (CCI) rose to 41.9 points in June, an uptick of 0.5 points over the previous month.
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.
"CCI data suggest job security and availability are gradually becoming a major concern for Indian consumers, after inflation," BluFin V-P Debopam Chaudhuri said.
"Improvement in inflationary conditions would not be sufficient to boost consumer demand. Since about 60 per cent of Indian GDP is composed of private consumption, a momentum based recovery in GDP would be possible only after pessimism about employment is mitigated among consumers," he added.
A sub index, which rates inflation sentiment, rose by 0.7 points to 27.5 points in June. This is the highest score since February 2012 when the index languished at 22 points. Besides, the spending sentiment stabilised at 30.5 points in June.
"The uptick in CCI index has been attributed to a marked improvement in the inflation sentiment Index. The prospects of a normal monsoon along with cooling commodity prices have reduced pessimism about inflation, paving the way for urban Indian consumers to open their purses," the report noted.
Talking about spending sentiment, BluFin said there has been a slight rise in the number of consumers willing to purchase home and two-and four-wheelers. However, absolute scores still remain much below the benchmark level of 50.
However, pessimistic views on employment, continue to be a small drag on the the consumer confidence index with the overall score falling slightly below the neutral mark of 50 to 49.9 in June, 2013.
"The sluggish recovery after a prolonged economic slowdown is not enough to improve the employment outlook of consumers. Without a recovery in this index soon, improvement observed in spending sentiment would likely not last," it said.
Another sub-index, which measures future expectations was at 40.7 points, indicating consumers were still pessimistic about the economy's prospects. However, consumers were more comfortable about their present situation with a score of 44.4 points.
In terms of region, consumers in eastern India continue to be the most pessimistic while those in the southern cities show the greatest propensity to spend.
On the employment front, Bengaluru continues to exhibit a robust employment sentiment, while Kolkata and Cuttack have witnessed an erosion.
The index is based on nation-wide monthly surveys of 4,000 respondents across 18 cities conducted by custom market research company TNS.