June consumer confidence dips after 8 quarters

India's index slips six points on inflation and monsoon worries

India's consumer confidence index, which was at a nine-year high in the March 2016 quarter, has slipped six points in the June 2016 quarter, indicating just how fragile sentiment can be.

The index, brought out by market research agency Nielsen, showed India's consumer confidence index at 128, behind the Philippines, whose index was 132 for the quarter. Indonesia's consumer confidence index came third at 119.

Nielsen's South Asia President Prasun Basu said the dip in confidence levels in the June quarter was due to a cautious attitude adopted by consumers. "With the hardening of fuel prices, rising (food) inflation and concerns around the monsoon (in May), consumers were cautious. The tilt of the consumer in the second quarter was also to save than spend, which reflected in the lower confidence index."

The dip in confidence levels showed up prominently in the sentiment towards job prospects and personal finances, two key indicators. These were down 5-7 percentage points vis-a-vis the March 2016 quarter.

But Basu said that he saw the second quarter dip as a temporary blip and India's index could recover in the coming quarters. Triggers boost urban and rural demand included good advancement of the monsoon and the Seventh Pay Commission and the One Rank, One Pension pay-outs.

Analysts have already said the impact of the Seventh Pay Commission on the economy was Rs 1.02 lakh crore, which would reflect in higher consumption, savings and revenue to the government through income tax, excise duty, etc. Nielsen's Consumer Confidence Index was prepared after surveying 30,000 respondents with internet access in 63 countries.

India was ahead of the global consumer confidence index of 98 for Q2, indicating that the nation remained a bright spot in a weak international market.

The March quarter also showed the global confidence index at 98.

North America was the only region to sustain growth momentum in the second quarter, with a three-point confidence increase to 111.

In Asia-Pacific, the confidence was relatively stable at 107, a one-point decrease from the first quarter. Japan's confidence was of particular significance as it decreased four points to 69. It was Japan's fourth consecutive quarter of declining scores, amid weak consumption and wage growth, Nielsen said.

Only China and Indonesia showed marginal increases in consumer confidence in the second quarter, rising one and two points, respectively.