Context:
Post 2025 the early urban consumers in India find themselves with the option of some relief due to diminishing inflation and growing discomfort at stagnant incomes and job fears. Consumer spending is gaining some stability, but people’s predominant concerns over money security seem to project the economy into an uncertain one.
Highlights of the Consumer Confidence Survey
Inflation Falls, But Is That Enough?
- Retail inflation eased to 4.31%, the lowest in five months and somewhat reassuring for household budgets.
- Yet, 93% of respondents do mention price rises, now this has fallen to the lowest level since mid 2024.
- A rising share stated that prices stayed the same; this is an indicator of stabilization.
Spending Patterns: Non Essentials and Essentials
- For Essentials:
- While 87.6% responded increased on essentials, now for the first time since September 2024, on the least.
- Less than 2% mentioned spending less on essentials, which seem to be holding on.
- Non Essential Expenditure:
- Non essential spending has nearly been on par from here onwards, as the segments have been very cautious.
- The huge caution on the part of the populace is evident in the low responses regarding increased expenditure on non essentials.
Larger Problems: Income Stagnation and Employment Concerns
- Income Stagnation:
- This has a record high for a decade whereby 55% of respondents said that incomes showed no increase.
- This perception is further reinforced by a drop in the share of those responding that incomes either increased or decreased, this again strengthens the perception of income stagnation.
- Employment Sentiment Falls:
- Unemployment feeling rose to 42.7%, escaping a paradigm from Covid pandemic aftermath recovery.
- Slowly being allowed a spurt of pessimism since mid 2024 suggests far deeper and far larger issues regarding the pace of the economy.
Economic Outlook: Clouded Horizon
- 43% believe that, for the most part, economic conditions have worsened: the largest share in twelve months.
- Flat wages and insecurity in jobs outweigh confidence in growth, despite the low inflation, thereby putting a question mark on long term financial stability.
Although a welcome change is decline in inflation, urban India is in a state of an awful lot of confusion about what the future holds with many other economic problems over its head. The stagnation of incomes and job issues take a heavy toll on poor consumer confidence.
