Consumer confidence in India dips in April-June: Nielsen

Consumer confidence in India declined in the second quarter this year with concerns over fuel prices and rising inflation, making the country lose the top position it occupied for the last two years as the most confident globally, says market insight firm Nielsen.

The Consumer Confidence Index score for India decreased by six points to 128 in the April-June quarter of 2016, from a high of 134 in the first quarter, the company said in a statement.

“This puts India in second place on the global index, after being in the lead for eight quarters. Globally, Philippines is the most optimistic country this quarter, with an index of 132,” it added.

Commenting on the findings, Nielsen South Asia President Prasun Basu said: “The dip in index hints at caution for consumers in India, with the hardening of fuel prices, rising inflation and concerns around the monsoon.”

There is a tilt towards savings as against discretionary spending, a softening in volume growth of the consumer goods baskets compared to last quarter and muted auto sales, he added.

The drop in consumer confidence echoes cautious views from fast moving consumer goods companies, which reported slow sales growth in the April-June quarter.

“In the first quarter, at least in the home and personal care, category growth slowed down to almost zero percent volume growth. We have now seen three consecutive quarters of slowdown in these categories, largely driven by rural,” said Vivek Gambhir, MD, Godrej Consumer Products, which reported a flat revenue growth in the last quarter.

Hindustan Unilever, the largest consumer goods company in India, too had reported only 4% rise in quarterly sales and warned that the consumer goods outlook had slowed down further and near-term demand outlook remained challenging.

After two years of drought, the monsoon rain has so far been good this year and the expectation is that in August and September the rainfall will be above normal. Consumer goods makers expect a good monsoon season, which will aid agriculture and thus boost rural consumption. The seventh pay commission payouts later this should also help lift consumption, experts add.

Nielsen’s Basu believes the drop in consumer sentiment in India may be a temporary blip. The Nielsen Global Survey of Consumer Confidence was conducted over May 9-27 and more than 30,000 online consumers were polled around the world.

As per the Nielsen Global Survey of Consumer Confidence and Spending Intentions, the mood worldwide held steady in the second quarter of 2016 at 98, an index score that was flat from the first quarter.

North America was the only region to sustain growth momentum in the second quarter with a three-point confidence increase to 111.

In Asia-Pacific, confidence was relatively stable at 107, a one-point decrease from the first quarter. Japan’s confidence was of particular significance since it decreased four points to 69. It was Japan’s fourth consecutive quarter of declining scores, amid weak consumption and wage growth, the company said.

Only China and Indonesia showed marginal increases in consumer confidence in the second quarter, rising one and two points, respectively.

The survey conducted from May 9-27 and polled more than 30,000 online consumers in 63 countries throughout Asia-Pacific, Europe, Latin America, the Middle East/Africa and North America.