Inflation, stock market and Indo-Pak war: 3 reasons behind rebound in consumer confidence

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Published: April 18, 2019 5:44:46 PM

Meanwhile, the increase in consumer confidence was also shown by RBI’s Consumer Confidence Survey (CCS) for the month of March 2019.

Consumer confidence is reviving in the Indian economy as war tensions between India-Pakistan recede, inflation stabilises and stock market gains, shows a study by Thomson Reuters-Ipsos. The news might cheer the Modi government facing the ongoing Lok Sabha polls as it shows positive outlook that consumers have towards the economy and might also contribute to tax revenue.

Consumer confidence reflects the degree of confidence consumers feel about their personal financial state, especially their ability to obtain and keep jobs. It helps in predicting the level of spending that consumers will engage in. The consumer confidence, which was falling for the last two months, has reversed its trend and is now showing recovery with a significant jump in India Primary Consumer Sentiment Index (PCSI) by 9.9 percentage points in April 2019.

In March 2019, consumer confidence had sharply fallen by 6.8 percentage points due to Pulwama and Balakot and a war like situation. However, it seems to be back on track now. “War clouds have receded, inflation is under control, the stock market in leaping up and the election speeches are full of rosy promises. all these are giving a strong boost to overall optimism and the buoyant mood of India,” says Parijat Chakraborty, Country Service Lines Group Leader, Public Affairs, Corporate Reputation & Customer Experience, Ipsos India.

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There has been an improvement in all the four sub-indices of the monthly PCSI index in March 2019 such as employment confidence, economic expectations, investment climate and personal financial conditions.

Meanwhile, the increase in consumer confidence was also shown by RBI’s Consumer Confidence Survey (CCS) for the month of March 2019. Consumer confidence has improved for the second consecutive quarter in the March 2019 round, said RBI survey.

While the current situation index (CSI) returned to positive territory after a gap of two years, the future expectations index (FEI) touched 133.4, an all-time high in the survey’s history, RBI’s survey added. The rise in confidence was mainly on the back of increased optimism about the general economic situation and the employment scenario.

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