Consumers upbeat despite inflation hit

Surveys signal rising optimism as consumers in Asian peers lag

- Suneera Tandon

Optimism sweeps across India's urbanrural divide as consumers turn more confident about their prospects in the days ahead, multiple surveys showed, despite inflation remaining a niggling concern. The positive sentiment portends good news for businesses, as they look to tap rising spending in an election year.

 At a time confidence fell in key Asian markets, Indian consumers turned upbeat in the December quarter, a McKinsey & Co. survey of 5,100 Asians showed. According to its quarterly APAC Consumer Pulse Insights survey, 81% of urban Indian consumers showed confidence in the country's economic recovery and growth, up from 75% in the September quarter. Meanwhile, consumer confidence fell in China (to 67%, down 4 percentage points, or pp), Australia (23%, down 6pp), Korea (13%, down 6pp), and Japan (10%, down 3pp).

McKinsey said the surveyed Indian households remain "positive" on spending on discretionary categories such as foreign trips and personal care services, while their peers in other APAC countries look to trim them.

"Our APAC Consumer Pulse Insights reveal that Indian consumers stand out in terms of confidence as compared to their regional peers, highlighting attitudes towards spending and overall perception of economic resilience," said Abhishek Malhotra, partner, McKinsey.

Private consumption is a powerful engine of the Indian economy, and an increase in consumption holds the promise to lift India's growth higher.