Personal Finances Drag Down MNI India Consumer Sentiment

PR Newswire | 04 Aug, 2015
MUMBAI, India: The MNI India Consumer Sentiment Indicator fell for the third consecutive month to 118.6 in July from 119.5 in June led by a weakening in personal finances.

Consumer confidence was down by 4.5% on the year and all five components of the Consumer Indicator were below their outturns a year earlier. The trend decline in sentiment seen since early 2014 had levelled off in recent months but the July outturn showed renewed weakness.

The decline in July was led by the Current Personal Finances Indicator which fell for the third consecutive month to hit a record low. Households were also slightly less optimistic about their future finances. Respondents said that higher family expenses were the main reason for their concern. As a result, consumers were left with much less to save, with 45% of respondents not saving at all, higher than last month's 33%.

Since the start of the year, optimism on current business conditions has fallen. This is in line with our sister MNI Business Sentiment Survey which shows that business sentiment remains lacklustre. Expectations for future Business Conditions have been more resilient as respondents are still optimistic that there will be bold reforms, with the short-term measure up by 1.3% and the long-term measure roughly around the same level as in January.

Weaker overall sentiment was probably down in part to higher inflation. The Inflation Expectations Indicator has risen 10.8% since the start of the year and was 2.5% above the outturn of July 2014. The indicator has a good lead on CPI inflation which is likely to turn upwards over the coming months, not least due to the impact of uneven monsoon rains on food prices.

Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, "This was a very disappointing result with consumer sentiment the weakest since March and not that far from the record low set in 2013. So far the rate cuts have had little impact, with consumers the most concerned about their finances since the survey began."

"Higher inflation over the second half of the year may preclude further action on rates from the RBI with the central bank likely to hold policy steady in August."

Notes to Editors

Please source all information to MNI Indicators.

The MNI India Consumer Sentiment Survey is a wide ranging monthly survey of consumer confidence across India.

Data is collected via telephone interviews. At least 1,000 interviews are conducted each month. The survey has been in place since November 2012.

The survey adopts a similar methodology to the University of Michigan survey of U.S. consumer sentiment.

The main MNI India Consumer Indicator is derived from five questions, two on current conditions and three on future expectations:

1) Current personal financial situation compared to a year ago

2) Current willingness to buy major household items

3) Personal financial situation one year from now

4) Overall business conditions one year from now

5) Overall business conditions for the next 5 years

Indicators relating to specific questions in the report are diffusion indices with 100 representing a neutral level, meaning positive and negative answers are equal. Values above 100 indicate increasing positivity while values below show increasing negativity.

About MNI Indicators

MNI Indicators, part of Deutsche Borse Group, offers unique macro-economic data and insight to businesses and the investment community. We produce data and intelligence that is unbiased, pertinent and responsive. Our data moves markets.

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