Indian consumer confidence declines in Q2 FY11: survey

Rising inflationary pressure has forced Indian consumers to cut down spends during the second quarter of 2011, despite optimism about job prospects and the state of personal finances, according to a survey by the Nielsen Company.

Though Indian consumers continue to remain the most optimistic globally, their confidence level slipped by 5 points to 126 index points in the second quarter of 2011 from 131 points in the previous quarter.

As per the Nielsen Global Online Survey, 56% of the Indians surveyed said it was a good time to buy things they wanted, compared to 61% in the previous quarter.

"Inflationary pressures are weighing on Indians, they may be optimistic about their jobs and the state of their personal finances, but inflation is definitely making them think about their spending habits," Nielsen India Managing Director (Consumer) Justin Sargent said.

They are beginning to tighten their purse strings compared to last quarter, he added.

More than half of the Indians surveyed said they were forced to cut their spends on new clothes, while half of them "also looked at cutting down expenses on gas and electricity", the survey said.

Other expenses that were reined in include telephones, upgrading technology, taking a break and out-of-home entertainment, it added.

Indians' tendency to save spare cash has also taken a hit due to the increase in expenses.

"Typically, Indians list 'savings' as a top priority. That is the case this time too, but we see a significant dip in the utilisation of spare cash, with just 54% of Indians intending to put aside their spare cash in savings," the survey said.

This could be largely due to the reduced amount of spare cash, with rising prices of essentials, the survey said.

In the previous quarter, 65% of the Indians surveyed had said they would save up spare cash.

Echoing global concerns over rising food and commodity prices, Indians, too, are most concerned about increasing fuel and food prices.

India has been reeling under high inflation, which inched up to 9.44% in June, 2011, due to higher prices of fuel and manufactured items.

Other concerns that will dominate the Indian psyche over the next six months is achieving a work-life balance and job security, said the survey, which was conducted between March 23 and April 12 this year.