This article presents the salient findings of the
Consumer Confidence Survey conducted in December
2011, the 7th round in the series. It gives an assessment of
the consumer sentiments of the respondents based on their
perceptions of the general economic conditions and personal
financial situation. The assessments are analysed in two
parts, viz., current situation as compared to a year ago
and expectations for a year ahead.
The survey indicates improvement in the positive
perceptions on current and future economic conditions.
Although the positive perceptions on household circumstances
have marginally increased, about one fourth of the
respondents continue to report weakening in this regard.
The proportion of respondents reporting increase in income
has been high but showed a decline over the last four
quarters. Similarly, the proportion of respondents expecting
increased future spending is gradually declining. More
than half of the respondents reported optimistic perceptions
about employment scenario in the economy. Overall
consumer confidence appears to have improved marginally,
both for current and future periods.
I. Introduction
The change in consumer confidence has the
potential to affect real economic activities in the similar
way changes in business sentiments do. Thus,
consumer confidence on the current and future
economic and personal financial situations is of
particular relevance for policy purpose. In this context,
consumer confidence surveys are carried out to obtain
qualitative information on the above for monitoring
the economic situation. Reserve Bank of India has been
conducting the Quarterly Consumer Confidence Survey
since June 2010. The latest round of the survey was
conducted in December 2011. Highlights of the survey
results are presented in this report.
II. Sampling Design
The survey covers six metropolitan cities, viz.,
Bangalore, Chennai, Hyderabad, Kolkata, Mumbai and
New Delhi. Each city is divided into three major areas
and each major area is further divided into three subareas.
From each sub-area, about 100 respondents are
selected randomly. For each round of survey 5,400
respondents are selected (900 from each city). Out of
the total 5,400 survey schedules, 5,272 schedules were
found to be suitable for further analysis.
III. Structure of the Survey Questionnaire
The survey schedule consists of qualitative
questions pertaining to impression about economic
conditions, views on household circumstances,
perceptions on price level, perception on employment
prospects, developments in real estate prices and views
on growth potential of the Indian economy.
IV. Survey Results: Key Highlights
IV.1 Economic Conditions
- There is some improvement in the positive
perceptions on current and future economic
conditions from the position in the previous
round of survey (Chart 1).
IV.2 Household Circumstances
- Although the positive perceptions on household
circumstances have marginally increased, about
one fourth of the respondents continue to expect
weakening (Chart 2).
- The net response on household circumstances has
slightly improved in December 2011 (Chart 3).
- Of the total respondents who reported better-off
household circumstances as compared with one
year ago, more than half of the respondents reported increase in salary and business income
as the main factor for this improvement (Chart 4).
- Of the respondents reporting worse-off household
circumstances, 17 per cent cited the reason as ‘increase in price level’ and another 16 per cent
as ‘decrease in Salary and Business income’
(Chart 5).
IV.3 Income
- Proportion of respondents perceiving increase in
current as well as future income, though high, has shown a decline over the recent rounds of the
survey (Chart 6).
- However, net response regarding future income
has increased marginally (Chart 7).
IV.4 Consumer Spending
- Net response in the perceptions on current
spending as compared to one year ago has
increased marginally (Chart 8). However, the
proportion of respondents reporting increase in future spending has been declining over the last
three rounds of survey.
- About 46 percent of all respondents reported rise
in current income as the main factor for increase
in spending. The perception of respondents
reporting increase in the costs of consumer goods
and services as factors influencing spending,
remained almost same as that observed in the last
round (Chart 9).
IV.5 Price Level
- The degree of negative perceptions on price levels
for future periods have increased in December
2011 as compared with September 2011 as evident
from the net response on price levels (Chart 10).
V. Perceptions on other Macroeconomic
Indicators
V.1 Interest Rates
- More than 80 per cent of the respondents were of
the view that the current interest rates are high from borrowers’ view point. Only 15 per cent of
the respondents felt that interest rates are
appropriate (Chart 11).
V.2 Employment Conditions
- The respondents reported more optimistic
perception on employment conditions. About half
of the respondents perceived future employment
prospects to be favourable (Chart 12).
- There has been noticeable decline in the
proportion of respondents ‘quite worried’ about
employment prospects.
V.3 Future Developments in Real Estate Prices
- The proportion of respondents expecting rise in
future real estate prices has increased significantly
(Chart 13).
V.4 Growth Potential of the Economy
- About 65 per cent of the respondents have
reported that the economy has potential to grow
above the current level
(Chart 14).
- In general, there has been decline in positive
perception in the latest two rounds of the survey
as compared to March 2011 and June 2011.
VI. Current Situation Index and Future
Expectations Index
- The Current Situation Index, a composite indicator
based on the net responses of economic conditions,
household circumstances, income, spending and price level, has marginally increased to 116.2 in
December 2011 from 115.0 in September 2011
(Chart 15).
- The Future Expectations Index is marginally higher
at 120.2 in December 2011 as compared with 118.7
in September 2011 (Chart 16).
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