Increasing food prices continues to be the biggest concern in the second quarter of 2010
25 July 2010, Mumbai, India
Registering a two point increase, at 129 points Consumer Confidence Index was the highest in India in the latest Nielsen Global Consumer Confidence Survey. Indonesia and Vietnam (both 119 index points) followed India in consumer confidence levels.
However, all is not rosy and a full global economic recovery is slower than anticipated. The global consumer confidence cautiously edged up one index point to 93 in the second quarter as confidence increases in booming Asian markets were offset by European consumers’ growing concerns of an escalating debt crisis, which battered confidence levels in Spain, Italy and France.
Nielsen’s Global Consumer Confidence Index tracks consumer confidence, major concerns and spending intentions among approximately 27,000 Internet users in 48 countries. The latest round of the survey was conducted between May 10 and May 26, 2010.
“The positive attitude of Indians comes on the back of a robust GDP growth (9%) in April – June quarter of 2010 after growing by 8.6 per cent in the preceding quarter according to estimates by Centre for Monitoring Indian Economy (CMIE). For the fiscal 2009-10 India's economy grew by 7.4 percent which is an upward revision from earlier estimates of 7.2 percent due to higher-than-anticipated growth in agriculture, mining and manufacturing sectors. In the opening month of 2010-11, growth came from the three sectors, mining, manufacturing and electricity. As per the use-based classification, growth numbers were also found to be remarkable; especially, the capital goods sector, which achieved a growth of 72.8 percent indicating a rise in investment sentiments in the economy,” said Piyush Mathur, President, India, The Nielsen Company.
Nearly 7 in ten Indians (69%) think that the country is currently not under economic recession. Out of those who think that India is currently under economic recession, 64 percent think that the country will be out of recession in the next twelve months.
Optimistic Indians
Indians emerge the most optimistic globally on all parameters, whether it’s their job prospects, personal finances or attitude towards spending.
More than nine out of ten Indians (92%) are optimistic about their job prospects in the next twelve months. 26 percent consider their job prospects “excellent” and 66 percent consider it “good”. This is the highest percentage for any country globally where job prospects are considered.
Indians are also the most optimistic when it comes to their state of personal finances in the next twelve months. 14 percent Indians consider their state of personal finances in the coming year “excellent” and 71 percent consider it “good”. With 85 percent votes, Indians top the list of countries that are optimistic about their state of personal finances in the next twelve months.
The high confidence levels and state of personal finances give Indians the confidence to spend. 59 percent Indians are optimistic that “now” is a good time to buy the things they want or need over the next twelve months.
“A steady rise has been seen in the confidence levels of Indians in their job prospects, personal finances and their economy. The cloud of a looming recession has disappeared and Indians are ready to spend. Now the ball is in the court of the marketers and their efforts that will make them a part of this spending kitty,” continued Mathur.
What they do with spare cash?
After meeting their essential living expenses, Indians love to put their spare cash into Savings. More than six out of ten Indians put their spare cash into savings. This is the most beloved use of spare cash for Indians, who haven’t conceded this spot to any other use for many rounds of this survey. At 63 percent, savings has become dearer to Indians by three percent compared to the last leg of the survey. India ranks seventh globally which puts spare cash into savings.
After saving, Indians love to put their spare cash in Shares of stock/ mutual funds. Nearly half the Indian consumers (46%) invest in stock. The percentage of Indians investing in the stock market has gone up by three percent compared to the last round of the survey and is the third highest percentage for a country investing in the shares.
After saving and investing, Indians love to spend their spare cash on Holidays/ vacations (38%), followed by New technology products (36% - 6th highest globally), New clothes (34%), Paying off debts / credit cards / loans (30%), Home improvements / decorating (29%), and Out of home entertainment (28%).
So we see that Indians are back on a spending spree, with most activities registering a growth except for Home improvements/ decorating, which has gone down by 3 percent.
Indians are a cautious clan when it comes to planning for their retirement. 23 percent Indians put their spare cash into Retirement funds. This is the fourth highest percentage globally, who put spare cash into retirement funds.
“The growth in purchase activities is a clear sign that Indians are fast moving away from a recessionary mindset, a major boost to a developing economy like India,” said Mathur.
Major concerns
Increasing food prices is the biggest concern for Indians in the next six months. However, compared to the last leg of the survey, the concern has gone down by four percent to thirteen. India ranks first globally in its concern for rising food prices.
Indian concern for increasing food prices is followed by their concern for Work/life balance (12%) and Terrorism (12%). Indian concern over terrorism is the second highest globally, behind Turkey.
The Economy, Global warming, Children’s education and/or welfare (all 8%), Job security and Parents' welfare and happiness (both 7%), are some other concerns bothering Indians. India ranks first in its concern over Global warming.
“Increasing food prices is a major concern that has been bothering Indians for some time now. The overall inflation averaged for the month of April 2010 stood at 9.6 percent as compared to the inflation of 1.3 percent seen in the same month of previous year. This rise in price index is on account of dearer food articles and fuel products. The concern over increasing food prices has become so big that it has replaced consumer concern over jobs and economy. Concrete steps needs to be taken to curb the increasing prices, if India has to retain its consumer confidence level,” continued Mathur.
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