Inflation in grocery and household items hurting Indian consumers: Report

 

• Most respondents in India feel more confident about their job prospects and ability to absorb further price increases

New Delhi: Consumers in India have reported a significant impact of inflation on their groceries and household products, followed by fuel and energy, according to findings of a regional consumer survey by Jefferies.

However, a majority of respondents in India feel more confident about their job prospects and ability to absorb further price increases. They are generally more positive about the prospects for the economy in the coming year, Jefferies analysts said as part of an Asia survey conducted on 2,600 consumers in Australia, China, Hong Kong, India and Japan.

The survey looked at the impact of rising prices and interest rates on consumers.

“Consumer confidence is highly polarized across the region, with China and India showing the most optimism across the region. 80% of respondents in India and 73% in China feel more confident with their finances. 57% of respondents feel less confident Concern over macro conditions is most overwhelming in Hong Kong, with sentiment felt that consumers in Australia and Japan are slightly less confident," he said.

Jefferies analysts tracking consumer goods companies in India said while inflation remains an issue, it appears to be offset by strong salary growth – 82% of respondents (in India) expect their salary hikes to increase over the next 12 months. Will keep pace with inflation. , The findings from India were skewed more towards urban consumers.

However, there are some mass consumption categories where inflation has had a greater impact, especially among low-income group consumers. Meanwhile, in India, 58% of respondents found inflation highest in groceries and household products, followed by fuel and energy (45%).

Inflation is hurting Indian families – this is especially true for low-income families. As a result, consumers are opting for cheaper products. According to the report's India-specific insights, "The survey points to high intent among consumers to downgrade to cheaper options, with 73% of respondents doing so in groceries and household products."

The survey also found consumer intent to postpone discretionary purchases such as vacations and electronics. “This is also corroborated by the FMCG management commentary, which also highlights consumers reducing volumes and downgrading to lower priced options. The survey also points to a higher intent to buy private labels. Inflation also appears to be causing consumers to cancel or postpone purchases, especially in discretionary categories such as travel/holidays, home renovation, electronics and restaurant/takeaway," he added.

In fact, the biggest intention of consumers in India was to delay purchases such as autos and holidays, with over 60% of respondents planning to postpone important purchases.

Commenting on the survey findings as a whole, analysts said participants from China and India feel more confident about their job prospects and ability to absorb further price increases. Optimism about future earnings and savings expectations is highest in China and India.

In fact, 81% of respondents expect the Indian economy to improve over the next 12 months, contrary to trends in other countries in the Asia Pacific. Meanwhile, 86% of respondents in India also believe that their employer's business is doing better this year than last year. The job market also appears to be strong with 74% of respondents expecting to take up a new job in the next 12 months.