MNI consumer sentiment indicator falls in May, makes a case for rate cut by RBI

Sentiment declines across components, led by fall in durable buying conditions

A widely-tracked consumer sentiment indicator for India was on the downward swing in May compared to April, making a case for the Reserve Bank of India (RBI) to cut the policy rate in its monetary review to be announced shortly on Tuesday. 

The MNI India Consumer Sentiment Indicator fell by two per cent to 119.6 in May from 122.1 in April. Sentiment across all components declined, led by a fall in durable buying conditions, said a statement from MNI.

Philip Uglow, chief economist of MNI Indicators, said, “While evidence this month further supports the view that we may have seen the trough in inflation, a further cut in official interest rates to support growth looks justified on June 2.”

He said while confidence ebbed a little in May there is some evidence to suggest the two rate cuts from RBI have helped to stabilise sentiment somewhat since the start of the year. 

Notably, current measures on personal finances and business conditions have perked up since January, he added. 

MNI Indicators specialises in producing business and consumer surveys designed to present an advance picture of the economic landscape and highlight changing trends in business and consumer activity. The indicators are widely used globally by different agencies and policymakers.