Security in Employment and positive economic growth stimulates big ticket purchases
ZyFin Research unveiled a report called Spending Sentiment Index (SSI) which measures consumers' overall spending plan on necessities as well as discretionary purchases. SSI of March'15 have shown 20% increase over March'14, thus projecting that Indian consumers are likely to indulge in lavish purchases like home, automobile etc. in near future.The Spending Sentiment Index, a barometer for consumer's inclination to spend, is based on a monthly survey of 3,0 consumers in 11 cities across India. A score above 50 reflects optimism, while below 50 is an indication of pessimism.
Although the SSI at 36.1 have improved compared to last year, there has been a dip of 4 points compared to last month. However, one should contemplate this decline as seasonal in nature and should not be interpreted as a trend.
Indian cities have shown interesting differences in consumer sentiment. Consumers in smaller cities like Mangalore, Indore and Lucknow are more assertive about spending as compared to consumers in metros like Hyderabad, Chennai, and Kolkata.
Consumer's spending sentiment is directly linked to their acuity on economic development and security in employment
Security in Employment: The poll reflect that Consumers are optimistic about prevailing and expected employment situation in India. They sense security in their current employment or foresee better opportunity in job market. March'15 have shown a rise of 6% as compared to March'14. Incidentally, hiring activities have increased in various sectors like IT, Banking, telecom, etc. based on recent statistics released by job portals.
Decline in Inflation: The poll also tracks price increases felt and expected by Indian consumers. It demonstrates the hopefulness amongst Indian consumer with respect to inflation. Inflation Index projected an increase of 25% over March'14 which imitates that India consumer believe that economy will perform better in immediate future.
With Moody's decision to revise the ratings outlook to positive from stable India's economic growth seems to be uplifted thus increasing optimism amongst Indian consumer.
Giving his views on the economic stance by Moody's Mr. Debopam Chaudhuri, Chief Economist, ZyFin Research, said, Moody's upgrade is conditional largely upon India's expected economic recovery. Rising consumer confidence in India is indicative of this recovering sentiment in India's expected growth. Healing confidence would cumulate into actual spending subject to borrowing costs coming down and employment condition recovering further.
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