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Mumbai: After five quarters, India has once again topped the Nielsen consumer confidence survey, to become the most optimistic consumer market, overtaking Indonesia.

Consumer confidence in India increased by seven points in the second quarter of 2014 to an index score of 128 points, displacing Indonesia which had 123 points in second place. The Philippines with 120 points came in third, according to the Nielsen Global Consumer Confidence Index released on Tuesday. Portugal and Slovenia were the most pessimistic nations.

“Consumers in India have indicated increased levels of confidence in the second quarter when the country’s general election was taking place in the country," said Piyush Mathur, president, Nielsen India.

Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism, respectively. A high measure bodes well for retailers and manufacturers as it shows the propensity of consumers to spend. The Nielsen Global Consumer Confidence Index rose 1 point in the second quarter to 97 led by consumer confidence increasing in 52% of the markets measured by Nielsen.

“This buoyancy is yet to translate into increased consumption across sectors," said Mathur, while explaining that high inflation expectations and fears of a poor monsoon remain worrying.

Consumer packaged goods companies are expected to post muted earnings growth in the quarter ended 30 June as demand stagnates and consumers continue to postpone purchases across both urban and rural India, Mint reported on 14 July.

The change in sentiment is reflecting in increased spending in the ongoing end-of-season sales that started in the last week of June and will run into the first week of July across most major brands such as Zara, Mango and Steve Madden and for department stores like Lifestyle, Pantaloons and Shoppers Stop.

“Sentiment plays a big role in driving consumption and we are noticing increased sales and like-to-like sales growth in the past month," said Dipak Agarwal, chief executive officer, DLF Brands Ltd, which has brands such as Mother Care, Mango, Forever21, Sephora, Boggi and Sunglass Hut in its portfolio in India. Like-to-like sales growth compares sales of stores that have been in existence for over a year and does not take into account growth due to opening of new stores.

On an average prior to December 2012, DLF Brands had like-to-like growth of 30% per annum, but this fell to 20% by the end of December 2013. “If this trend (of buoyant consumer spending) continues, we will see better growth than what we had prior to 2012," said Agarwal.

Discretionary spending is likely to increase, said the Nielsen survey, as close to 60% of online respondents polled indicated that this is a good time to buy things they want and need, up by 6 percentage points from 54% in the preceding quarter. Meanwhile, those looking to save and reduce spending have decreased by 6 percentage points as well from 81% to 75%.

The trend for increased spending will accelerate by the festive season as there will be a marketing stimulus, said Mathur, who felt that the annual budget announced by the new government reveals a positive outlook for business and should reflect in consumer sentiment in subsequent quarters. However, “it will need to be watched closely," said Mathur.

Eighty-three percent of the respondents are optimistic about job prospects over the next year—a 9 percentage point increase in sentiment from last quarter. India is the most optimistic globally about local job prospects over the next 12 months, followed by the Philippines at 77% and Indonesia at 76%.

The survey was conducted during 12–30 May, and polled more than 30,000 online consumers in 60 countries.

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