Key UBS Evidence Lab findings: what surprised and what didn't?
Key findings from UBS Evidence Lab’s survey of about 1,600 urban Indian consumers were:
- income growth expectations were sharply down, although confidence levels for jobs, personal finances and perceived incomes remain stable;
- inflation expectations have fallen sharply to 4.6%, a historical survey low, although perceived inflation remains steady;
- a rise in near-term purchase intentions for autos likely due to recent postponements;
- financing conditions have not worsened versus early 2019;
- intention to purchase property continues to increase; and
- the home-repainting cycle seems to be getting longer, and gold jewellery demand appears to be holding up.
Macro drivers of consumption are supportive
The income outlook has moderated compared with early 2019, reflecting the negative feedback loop-induced slump of the last four months. However, confidence level indicators (personal finance, job security, perceived income trends) remain steady. Lower inflation and steady financing conditions suggest that macro drivers could support the market's hopes of a recovery.
Key sectors: Autos (mixed) and Real Estate (positive)
Autos (mixed): Overall purchase intentions for two wheelers (2Ws) and cars remained stable YoY. Intentions to purchase within the next six months have increased substantially for 2Ws and cars YoY and HoH. Real estate (positive): Property purchase intentions are better YoY, and the majority of respondents expect prices to rise. Please find further details in our auto and real estate reports.
Key sectors: Select Discreet (mixed); FMCG (positive)
- Paints (mixed): the survey points to robust demand for decorative paints, but also an apparent lengthening of the home-repainting cycle in contrast to previous surveys.
- Jewellery (positive): gold jewellery demand appears to be holding up, although the trend of formalisation may be stabilising.
- FMCG (positive): mean spend on personal care stabilising and improving for home care products; we also note a sequential recovery in cigarette consumption. Please see our India Consumer Sector report.