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Monday, January 31, 2011

High food prices forcing Indians to cut other spendings:Study

Rising inflationary pressures, especially high food prices, have become a major cause of concern for Indians, who are being forced to cut down discretionary spends, according to The Nielsen Global Consumer Confidence Index.

Despite being the most optimistic globally when it comes to their job and personal finance for the next 12 months, the survey said, in the next six months Indians will be most concerned about increasing food prices.

As per the survey, that polled over 29,000 Internet consumers in 52 countries in November 2010, 90 per cent of Indians were upbeat about their jobs, while 84 per cent of them are bullish on their personal finance.

"Increasing food and fuel prices remain a big concern for Indians and has a significant bearing on their lifestyles as they try and balance rising costs by cutting down other living expenses," The Nielsen Company Managing Director Consumer (India) said in a statement.

Fifteen per cent of Indians (polled) considered it as their biggest concern and India ranks fourth globally in its concern for increasing food prices, it added.

Food inflation was at a high level of 15.57 per cent in the week ended January 15 on dearer vegetables.

The survey said compared to this time last year, more than seven out of ten Indians have changed their spending habits to save on household expenses, which is two percentage points higher than in the third quarter.

"More than half the Indians (51 per cent) surveyed, now spend less on new clothes to cut down expenses," it said, adding 50 per cent Indians now try to save on gas and electricity to save on household expenses, compared to 56 per cent in the previous round.

About 43 per cent of the Indians surveyed said they will cut down on out of home entertainment, 41 per cent on telephone expenses, 38 per cent on holidays or short breaks and 35 per cent will delay upgrading technology such as personal computers and mobiles to save on household expenses.

"Global economic conditions are acting as a deterrent to the spending habits of Indians. We saw a resurgence in spends in the previous two quarters but the last quarter of 2010 shows a decline in spending intentions," Nielsen Company Managing Director said.

Under the current scenario, marketers will have to try harder to get the consumer to reflect the confidence that they show in their job prospects and state of personal finances in their spending habits, Nielsen Company Managing Director added.

According to the Nielsen Global Consumer Confidence Index, 65 per cent of the Indians polled said they put their spare cash into savings. Other areas where Indians put their spare cash include stock market, mutual funds, new clothes, out of home entertainment, paying off loans and on retirement funds.

However, Indians have yet again defied global sentiment, as the consumer confidence levels in India have risen by two points and reached 131 index points.

Globally, confidence levels fell in 25 out of 52 countries surveyed in quarter four of 2010 as hope for a global economic recovery evaporated at the end of last year.

Philippines followed India to the second spot with 120 index points and Norway came third with 119 index points.

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