Consumer spending to be robust in the next 3 months as many plan to spend on gadgets, white goods & travel
- • 30% consumers plan to make purchases with value above Rs. 25,000
- • 73% households feel squeezed when it comes to their earnings and spending
- • Only 44% households expect their earnings to increase in the next 12 months
Mood of the Consumer: Consumer spending to be robust next 3 months as many plan to spend on gadgets, white goods & travel
June 11, 2019, New Delhi: For many, the months of April and May mark the time for salary increments and bonuses which they plan to use to make those pending purchases for the family. This year, the month of May also gave us the results of the Lok Sabha elections 2019, where citizens handed over another session to PM Modi through a huge mandate. Both these things together, have led to positive sentiments amongst consumers as well as the market, and the consumer spending is expected to be robust in the next few months. LocalCircles conducted its bi-annual ‘Mood of the Consumer’ survey to check how they plan to spend in the next 3 months, which received more than 36,000 votes from consumers across India.
In the first question, consumers were asked if they were planning to make any major purchases in the next 3 months, with a value of above Rs. 25,000. 51% answered in a ‘no’ while only 30% answered in a ‘yes’. 19% said they are unsure about it.
30% consumers plan to make one or more major purchases(with value above INR 25,000) in next 3 months
Next poll asked in which category will they make the purchase, if they decide to do so. 8% said home, jewellery or automobile, whereas 20% said AC, refrigerator or other home goods or gadgets like mobile, laptop etc. 22% said travel and 50% said they don’t plan to make any big purchases.
Travel, mobile/gadgets, white good are top areas of consumer spending in the next 3 months
Gadgets like mobiles and laptops have been popular purchase items over the past few years and consumers have shown a tendency to upgrade them often. With disposable incomes increasing, travel has also emerged as an area when more and more consumers have been spending. And with the summer vacations going on, many consumers have plans to take their kids on holidays in India and abroad.
In the following question, consumers were asked what has been their household position with respect to earnings and expenses in the last 12 months. 9% said they are comfortable as their earnings have risen significantly more than the expenses. 18% said they are managing through as their earnings have risen slightly more than the expenses. 33% said they are squeezed as earnings have risen less than expenses and 40% said they are in distress as earnings have been flat/declining & expenses have risen/are the same.
73% households feel squeezed when it comes to their earnings and expenses
However, this indicates a worrying trend that 73% households are either feeling the squeeze or under financial distress. The number stood at 60% in September 2018 Mood of the Consumer survey of LocalCircles.
The economic growth stood 6.3% in the last quarter of 2018 and the year over year inflation rate stood at 5.24%. Having mentioned this, the consumer sentiments are quite positive due the re-election of the NDA Government and the outlook is good.
Consumers were also asked how they see their annual earnings change in the next 12 months. 14% said it will increase by over 15% and 30% said it will increase by upto 15%. 38% thought it will remain the same and 18% thought it might decrease.
Only 44% households expect their earnings to increase in the coming 12 months
In the final question, consumers were asked if the prices of petrol and diesel rise by up to 10% in the next 3 months, how would it affect their household spending. 30% said they will reduce their spending by 10% or more. 20% said they will slightly reduce their spending while 30% said they will not be reducing their spending. 20% said that they in turn expect to increase their spending. Fuel expenses have an important share in every household’s monthly expense. Rising fuel prices do put a strain on the budget and forces households to cut down on their expenses in other areas. However, the survey indicates that it will lead to direct impact on only 30% households who would be forced to reduce spending.
50% households won’t reduce spending even if price of petrol/diesel increases by 10%
Overall, it appears that while in the next 3 months, the consumer spending will be robust in sectors like electronic gadgets, white goods and travels, the medium term outlook on earnings growth is concerning. This is something that can only be addressed with economic, business and public spending growth.
Poll Demographics and Participation
Over 36,000 responses were received from 20,000+ unique consumers located in 200 districts of India. Approximately 37% of the respondents were women while 63% were men. 64% of the participants were from Metro/Tier 1 cities, 28% from Tier 2 cities and 8% were from Tier 3 and rural locations.