With the festive season drawing closer, Indian consumers are exuding increased confidence in their financial stability, signalling a boost in spending, found a study by Deloitte. According to the study, Indian consumer sentiment is on the rise, with 56 percent of respondents expressing readiness to splurge on festivities. Furthermore, 49 percent believe they are well-equipped to handle significant unforeseen expenses in the near future.
This is in contrast to the July survey carried out by the Reserve Bank of India (RBI), which found that consumer confidence continues to recover from the historic low recorded in mid-2021, though it still has some way to go. It must be noted that Deloitte's sample size is much smaller than the RBI's — 1,000 as against 6,047, respectively.
Deloitte's August 2023 research, part of their Global State of the Consumer Tracker (now rebranded as ConsumerSignals), reveals that:
In the short term, consumer spending is poised to surge, particularly in sectors such as clothing, personal care (with a 12 percent increase), and recreation, entertainment, and leisure (with a 14 percent increase). These trends underscore the anticipation of increased spending as the festive season draws nearer, the study found.
Rajeev Singh, Partner and Consumer Industry Leader at Deloitte Asia Pacific, said, "India's booming economy is encouraging consumers to embrace premium and luxury spending. This shift extends across consumer durables, travel, and hospitality, with Tier 2 and 3 markets also showing significant growth." Singh added, "Discretionary spending is poised to increase, benefiting sectors like retail, automotive, and travel and hospitality."
There has been a surge in domestic flight bookings, with a remarkable 74 percent increase in August compared to July, and international flight bookings also saw a substantial uptick, rising by 58 percent in the same period. Additionally, the demand for luxury hotels experienced a 5 percent increase in August compared to July.
Moreover, the study found that 63 percent of consumers are planning to purchase a new vehicle in the next six months, marking a 4% percent increase from July.
Other Key Trends
Consumer Spending Sentiment: In August, 77 percent of Indian consumers expressed confidence in their credit card debt management, and 61 percent had no intention to delay significant purchases in the near future. Furthermore, 60 percent of respondents anticipate financial improvements within a year, while 54 percent believe they are making progress toward their financial goals.
Impact of Rising Prices: Despite price hikes in food and grocery markets and consumer durables, consumers expressed confidence in their shopping plans. Fifty-five percent are eager to invest in popular name brands for consumer durables, and 57 percent are willing to splurge on premium ingredients for food and groceries. Additionally, 67 percent favour fresh foods over processed options.
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