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Consumer confidence falls first time in 2 years: Nielsen

Consumer confidence in the country declined for the first time in nine quarters due to a fall in employment sentiment and subdued spending behaviour, according to the latest edition of the Nielsen global consumer confidence index.

"The drop from the top position for India after nine quarters indicates a growing anxiousness amongst consumers today in relation to the job prospects and spending habits," Nielsen India region president Piyush Mathur said.

The country registered a decline of four points in the index to 119 from the first quarter of 2012. The country is at No 2 in the most-confident countries in the world. "The four points fall is fairly significant. Now we are going below 120 points. The sentiment is not where it used to be. Rising inflation and fuel prices, which are a direct hit on the wallet, combined with a comparatively low GDP and fall of the rupee have taken a toll on consumer confidence," Mathur said.

 Consumer confidence falls first time in 2 years: Nielsen


Elaborating further, he said, "there is some corelation between GDP and consumer confidence. In the second quarter of 2011, our GDP growth started going below 7 percent mark. Over the past four quarters, we have been gradually sliding down. The confidence level slipped by 5 points to 126 in the second quarter of 2011. The sentiment seems to be bearish below the 7 percent GDP mark."

According to the report, the average global confidence index has declined by 3 points to 91. The lowest point in last seven years since Nielsen started compiling the data was in the second quarter of 2009.

"This 91 is like the recovery that started in quarter four of 2009. It was a feeling of coming out of the recession. It is not peak recession at a global standpoint," he said, adding below 100 points indicates pessimism.

India still ranks at the top when it comes to job prospects, but the index has declined by seven points to 77 during the quarter, he said. Mathur said according to a study, around 1 percent increase in GDP is equal to 1 million new jobs being created. Job scare and financial concerns continue to haunt the people as 21 percent stated job security as the biggest concern followed by 12 percent who expressed concern over the state of economy.

Increasing fuel price was also a concern for 8 percent while rising food prices was a big concern for only 6 percent. As many as 53 percent feel that the country is under recession now, which is a two percentage points increase over the previous quarter and over 10 percentage points increase from the year-ago period.

"Just when our GDP started falling below 7 percent, you saw this concern rise up. It is gradually rising and gradually our GDP has been falling," Mathur said. Of the 53 percent Indians who think the country is in recession, only 42 percent believe that the country will be out of woods in the next 12 months, while 33 percent believe that the country will be in recession for more than a year.

"A quarter of consumers are saying we are in recession and it is going to last over a year," he said. Almost 52 percent of consumers said they would try to cut down on their gas and electricity bills. Customers also said they would splurge less on clothes with 47 percent saying they would spend less on new clothes.

Consumers are also ready to wait for better deals on home loans, insurance, with 22 percent opting for it. "There is a 9.5 percent fall in the insurance premium for fiscal year 2012. People are getting sensitive to better deals. Home loans and personal loans are slowing down. There was a 17 percent growth in them in 2010-11. It is a 12 percent growth in 2011-12," Mathur said.

Consumers, however, said they would continue to spend on essential items like grocery. "If you start cutting down on your essential then it is not a recession it is a depression. Essentials you will always spend but discretionary is what you will start cutting down in a recession," he added.

The Nielsen global consumer confidence index tracks consumer confidence, major concerns and spending intentions among over 28,000 Internet users in 56 countries.


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Updated Date: Dec 20, 2014 10:22:28 IST