Consumer confidence continues to be low in Feb

The confidence of urban consumers continued to be low in February as concerns over rise in prices of essential commodities dampened spending sentiments, says a study by financial services provider BluFin.

BluFin's Consumer Confidence Index (CCI) stood at 38 points in February, showing no improvement over the previous month's number despite moderately less pessimism about employment and inflation.

The index is a key 'aggregate' indicator that assesses the pulse of urban Indian consumers with regard to the economy, spending behaviour and employment. It reflects pessimism at below 50 score and optimism above that.

The study is conducted among 4,000 urban consumers in 18 Indian cities, including metros and smaller cities.

"With retail inflation rising for the fourth consecutive month and with food inflation at 14.08 per cent, the survey reveals that consumers are increasingly postponing their decisions on discretionary spending, especially with regard to the purchase of consumer durable goods.

"The uptrend seen in prices of basic necessities is a cause for concern as the problem is more supply side driven," BluFin CEO Rashid Bilimoria said.

Consumer sentiment on spending, at 22.6 in this month has declined by 0.8 points from January, the study said adding a revival in willingness to spend would be key for the overall Consumer Confidence Index to rebound.

A sub index, which rates employment sentiment, has reflected increased pessimism about employment across the country. The employment sentiment improved by 0.6 points to 44.5 points in February.

"Although the levels still indicate pessimism, a perceived improvement in job availability and job security seems to have triggered a marginal uptick," the study said.

Similarly, the index which measures inflation sentiment rose by 1.6 points in the current month on increased comfort with borrowing following a cut in policy rates by the Reserve Bank and expectations of further rate cuts.

However, with a weakening sentiment around general price levels, the index score of 25.5 remains in the pessimistic range.

Another sub-index, which measures future expectations was 34.5, indicating consumers were still pessimistic about the economy's prospects. Although, consumers were more comfortable about their present situation with a score of 46.6.

Notably, despite the inflationary pressures felt by consumers, confidence has risen over the last month in the four metros-Delhi, Mumbai, Kolkata and Chennai.