Consumer confidence on the wane, says study

ZyFin's Consumer Outlook Index has fallen to 40.5 points in August

Consumer confidence in the country slipped in August on the back of rise in inflationary concerns and job security worries, says a study by financial services provider ZyFin.

ZyFin's Consumer Outlook Index (COI) has fallen to 40.5 points in August, a decline of 0.3 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.

"The spiralling rupee is one of the most important factors that is affecting inflation sentiment and dragging it down," ZyFin CEO Rashid Bilimoria said.

"Moreover, the current economic slowdown along with bleak job market and a constant influx of news indicating fewer new jobs available in the job market are contributing to the consumer pessimism," he added.

A sub index, which rates inflation sentiment, was on an uptrend in the recent past but it registered a decline of 0.4 points from the previous month to 27.2 points in August.

Another major contributor to the downfall in the overall index is employment outlook which has been falling since February. The employment index declined by 0.7 points over the last month to 49.1 points --lowest since October 2011.

"What has mitigated the fall in the overall index has been the buoyancy shown by consumers towards increased spending," the report said.

The spending sentiment index has been improving for the last three months to reach 31.2 points in August.

Another sub-index, which measures future expectations was at 39.7 points, indicating that consumers were still pessimistic about the economy's prospects. However, consumers were more comfortable about their present situation with a score of 42.3 points.

In terms of region, the index has risen significantly in the South and stabilised in the West, owing mostly to improving employment indices in these regions.

The Northern and Eastern regions of India have shown reduced consumer confidence levels marked by weakening labour market outlook and worsening inflationary situation.

The index is based on nationwide monthly surveys of 4,000 respondents across 18 cities.