Consumer sentiment remains muted amid high prices

The current economic upheavel, global scenario has left the consumer in a 'wait and watch' mode

The confidence among urban consumers remained muted in May due to rising food prices and uncertain economic conditions, says a study.

Financial service provider BluFin's Consumer Confidence Index (CCI) rose by marginally 0.7% to 41.7 in May from 41.1 in April.

"There has been virtually no change in the consumer sentiment since last month. The slight sign of improvement that the CCI numbers was showing seems to have come to a standstill.

"The current economic upheaval and the global scenario has left the consumer in a 'wait and watch' mode. Now we need to watch for the next months numbers to know if this is a beginning of a negative trend or is just a temporary pause," BluFin CEO Rashid Bilimoria said.

The BluFin index is based on the current sentiment of consumers along with their feelings about the future of inflation, spending and employment. The index reflects pessimism at below 50 score and optimism above that.

Market experts believe Indian consumers are concerned about rising food prices, which is pulling down the consumer confidence index.

Inflation in the country is currently hovering at above 7% level. The Wholesale Price Index (WPI) inflation accelerated to 7.23% in April from 6.89% in March. The increase was mainly due to higher prices of vegetables, meat, fish and milk.

A sub-index, which rates future expectations was 38.7, indicating consumers were still pessimistic about the economy's prospects. Although, consumers were more comfortable about their present situation with a score of 49.2.

Spending sentiment index has dropped by 3.8% over the previous month to 27.2, inflation sentiment index also fell by 1.5% to 25.8 which shows consumers growing concern regarding inflation.

Besides, at 48 the employment sentiment index, which remained relatively flat for the last few months, shows that consumers are relatively less pessimistic about their employment situation.

"While their current job outlook has gone down to 39.8 they are slightly positive about retaining their jobs," the report said.

In terms of geography, the north and southern region lead the consumer confidence levels with scores of 45.9 and 45.1 respectively.

Individually, with Mangalore, Hyderabad and Bengaluru leading the score at 53.6, 49.5 and 46 respectively are the most upbeat cities, while Guwahati, Kochi and Nagpur are the most pessimistic at 31.7, 31.5 and 31.2 respectively.

The study was based upon interview of about 4,000 urban consumers in 18 Indian cities, including metros and smaller cities.