Consumer spend at all-time low this Diwali: 4 things you need to know

The festival season has failed to lift consumer sentiment, especially in metros and Tier I cities due to the current economic gloom and an uncertain job environment.

The consumer confidence index, which measures consumer sentiment across India, released by Zyfin Research came in at an all-time low of 39.0, reflecting pessimism on inflation, spending and employment.

“The Consumer Outlook Index declined further in October as concerns about short-term outlook on household earnings and comfort in borrowing continued to rise. Deep pessimism among spenders who contribute to approximately 60% of the Indian GDP is a prime reason for the current economic slowdown,” said Debopam Chaudhuri, VP Research, ZyFin Research.

[caption id=“attachment_501049” align=“alignleft” width=“380”]  Reuters[/caption]

The index is based on a monthly survey of 4000 consumers across 18 cities and reflects consumers’ current and future spending plans, employment and inflation outlook.

More from Economy

Inflation likely to be a big focus area for budget 2024, say sources Explained: Will the Bank of Japan break tradition and raise interest rates?

Here are the key highlights:

1. Consumers in metro and tier-I cities have become more cautious and pessimistic about the prospects of the economy. They are highly concerned with increasing discomfort over rising inflation and expenditure on basic necessities.

2. Ironically, consumers in tier-II cities are the only ones to have reported a decline in pessimism levels.Consumers in smaller cities expect overall economic conditions in general and their employment conditions in specific to improve over the next 12 months.

3.The only index that could soon be on optimistic ground is the Employment Sentiment Index.

4.Declining for the third consecutive month, the Inflation Sentiment Index is at 22.7 versus 24.1 in September. The score is at its lowest in 2013 as consumers expect prices to increase in the near future.