Petrol price hike would dent consumer confidence

NEW DELHI: Till last week, Indian consumers were on top of the world. According to the Nielsen Global Survey of Consumer Confidence and Spending Intentions, confidence levels were the highest in India during the first quarter of 2012.

But the hike in petrol prices could change that. "Consumers could react negatively to this price hike. It would also create indirect inflationary pressures which will further dent consumer sentiment," says Rashid Bilimoria, CEO, BluFin.

The BluFin Consumer Confidence Index (CCI) tracks consumer sentiment andspending behaviour in India. The index is based on a nation-wide monthly surveys of 4000 respondents across 18 cities. In April,the BluFin CCI was at 41.4, still below the red mark of 50 which denotes pessimism. But the good news was that it had risen steadily in the past four months.

The bad news is that a marked improvement in the sentiment about big-ticket purchases, such as cars and homes, was responsible for the rise in the CCI in April. This could see a reversal when the next BluFin CCI numbers are announced on 13 June.

"Although, the BluFin CCI score remained in the pessimistic realm for the past six months, it was on an upward trajectory. With this petrol price hike, we could see this trend reversed," says Bilimoria.