India consumer confidence hit ten-year high despite demonetisation: Nielsen survey
Rise in the confidence index in fourth quarter reflects strong economic, commercial performance at the end of third quarter and at the beginning of fourth quarter, says Nielsen’s Prasun Basu
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Bengaluru: Consumer confidence in India rose to the highest level in 10 years in the December quarter despite the effects of demonetisation, Nielsen’s global consumer confidence index report showed on Monday.
India retained its No.1 spot among the 63 countries surveyed, with its score increasing by three index points sequentially to 136. The Philippines (132 points) and the US (123 points) ranked second and third, respectively. An index reading above 100 points denotes optimism.
Confidence in the Asia-Pacific region in the December quarter stood at 111 points, up two points from the previous quarter and led by India, which Nielsen called “a nation of determined optimists.”
“The three-point increase in the confidence index in the fourth quarter reflects strong economic and commercial performance at the end of the third quarter and at the beginning of the fourth quarter, further benefited by the timing of the festive season, when confidence typically rises,” Prasun Basu, Nielsen’s South Asia president, said in the report.
India scored the top spot in Nielsen’s survey for eight consecutive quarters until June last year when it trailed the Philippines. But it regained the position in the September quarter and has retained that lead in the December quarter.
More than eight in 10 Indian respondents in the latest survey were confident about their personal finances (85%) and job prospects (84%) in the coming year, and nearly seven in 10 (69%) said they believe it is a good time to spend.
“During the survey period, the Indian government announced demonetisation of high-denomination notes. While this move created short-term constraints for consumers, the long-term outlook is bullish–a sentiment clearly echoed in other Nielsen research and by a recently released study by the Reserve Bank of India–thus strengthening the overall confidence levels for the next 12 months,” Basu added.
“For most FMCG (fast moving consumer goods) companies, the impact of demonetisation was in two broad areas - servicing the distribution channels and the hit on consumer demand. At the consumer level, the sales naturally declined due to the cash crunch. The staples did not see a sizeable impact; however, discretionary consumption did take a hit. This was, however, a short-term phenomenon. With the stable inflow of new currency, we are seeing a steady revival and expect improvement on a continued basis,” said Varun Berry, managing director, Britannia Industries Ltd.
At a global level, Nielsen’s consumer confidence index was at 101 points in the December quarter, up two points from the previous quarter.
Established in 2005, the Nielsen Consumer Confidence Index is filed quarterly in 63 countries to measure the perceptions of local job prospects, personal finances, immediate spending intentions and related economic issues of real consumers around the world.