Consumer confidence improves in November: ANZ report

By Gayatri Nayak, Shreya Sinha

MUMBAI: After being in the dumps, consumer confidence in the country has jumped in November, helped by a sense of economic optimism and an easing of inflation, said a survey.

The ANZ- Roy Morgan India survey said the consumer confidence jumped 118.3% in November, after four consecutive months of decline. The Australian bank launched its index for India to assess consumer outlook for the current financial situation as well as give a future outlook.

On the current financial situation, 18.9% (up from 13% in October) of the respondents said their families are “better off” now than a year-ago. However, 25.6% (down from 36.2%) said they are “worse off” financially. Though sentiments have improved, on a net basis, an excess of 7% feel they are not yet out of the woods yet.

However, 1,000 respondents to the ANZ- Roy Morgan survey are more optimistic about the year ahead. Looking ahead, 42.7% (up from 40.2%) of the respondents said they expect their families to be “better off” financially in a year’s time. While only 11% (down from 13.1%) felt that their families could be “worse off”.

“A durable increase in optimism may now be falling into place in India,” said Glenn Maguire, ANZ chief South Asia, ASEAN and Pacific economist. “The recovery is real. The gradual pick-up in growth is based on strong fundamentals.”

Lower inflation numbers in the past three months have also added to the consumer optimism. “Core inflation has softened,” said Devika Mehndiratta, senior economist . “Only lower inflation will improve consumer confidence,” she added.

Apart from standard macro-economic developments, the Index also factors in currency, gold price, equity markets and political developments while determining confidence so far this year.

Capital flows and restrictions on gold imports have the potential to impact asset prices in India and could potentially see confidence turn more variable in the near term if curbs on gold imports are not lifted, and in the medium term, if the commencement of the Fed rate hike cycle pulls capital out of India.