Home / News / India /  Inflation in groceries and household hurting Indian consumers: Report

New Delhi: Consumers in India reported a significant impact of inflation on their groceries and household products, followed by fuel and energy, according to findings of a regional consumer survey by Jefferies.

However, most respondents in India feel more confident about their work prospects and ability to absorb further price increases. They are also more positive about prospects for the economy, in general, over the coming year, analysts at Jefferies said as part of an Asia survey conducted across 2,600 consumers in Australia, China, Hong Kong, India and Japan.

The survey looked at the impact of rising prices and interest rates on consumers.

“Consumer confidence is highly polarized across the region with China and India showing the most optimism across the region. 80% of respondents in India and 73% in China feel more confident with regard to their finances. Concerns over macro conditions weigh most heavily in Hong Kong with 57% of respondents feeling less confident. Consumers in Australia and Japan are slightly less confident," they said.

Analysts at Jefferies who track consumer goods companies in India said that while inflation remains an issue, this appears to be offset by strong wage growth—82% of respondents (in India) expect their wage growth to keep pace with inflation over the next 12 months. India findings were more skewed towards urban consumers.

However, there are certain mass consumption categories where inflation has had a greater impact especially among low-income group consumers. Meanwhile, 58% of respondents in India find inflation in groceries and household products the highest, followed by fuel and energy (45%).

Inflation has been hurting Indian households—this is especially true for families in the lower income bracket. As a result, consumers are opting for cheaper products. “The survey also points to high intent among consumers to downgrade to cheaper options, with 73% of respondents doing so in groceries and household products," according to the report’s India-specific insights.

The survey also found consumer intent to postpone discretionary purchases such as holidays and electronics. “This is also corroborated by FMCG management commentary, which also highlights consumers titrating volumes and downgrading to lower-priced options. The survey also points to a high intent to purchase private labels. Inflation also appears to be causing consumers to cancel or postpone purchases, especially in discretionary categories such as travel/ holidays, home renovation, electronics and restaurants/ takeaways," they said.

In fact, consumers in India had the greatest intention to delay purchases such as auto and holiday with over 60% of respondents planning to postpone significant purchases.

Commenting on the survey findings overall, analysts said that participants in China and India feel more confident about their work prospects and ability to absorb further price increases. Optimism regarding future earnings and savings expectations is highest in China and India.

In fact, 81% of respondents expect the Indian economy to improve over the next 12 months, a contrast to trends in other countries in Asia Pacific. Meanwhile, 86% of respondents in India also believe that their employer’s business is trending better this year versus last year. Job markets also appear to be strong, with 74% of respondents looking to take up a new job over the next 12 months.

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