India consumer confidence ends 2015 at historic low: MNI India Consumer Sentiment Indicator

Rising inflation hurts consumer sentiment

Consumer confidence fell for the fourth consecutive month in December to the lowest on record, as consumers reported a further deterioration in their personal finances and revised down their assessment of the business environment. Respondents saw little hope of a turnaround either, with expectations for the future falling sharply.

The MNI India Consumer Sentiment Indicator fell 4.6% to 108.5 in December from 113.7 in November. The decline was broad-based with all five components of the Consumer Indicator down on the month. While sentiment remains above the 100 level, meaning optimists still outnumber pessimists, it has fallen 9.3% over the past year and now stands 10.8% below the series average.

Confidence has been in trend decline over the past year and has fallen sharply since April in spite of aggressive action from the central bank to boost economic growth, questioning just how solid the economy is.

There was a drop in confidence in household finances, with both current and future measures falling to record lows. Almost 94% of respondents said they used the majority of their income on daily expenses, with very little left to save or invest. A rise in inflation has made matters worse with consumers increasingly dissatisfied with current prices.

Consumers also revised down their expectations for business conditions and were more downbeat in their perception of the current business environment in December. Respondents downgraded their outlook for business over the coming year, with Business Conditions in One Year registering a 6.2% decline on the month, while Business Conditions in Five Years dropped 4.1%.

Respondents were significantly less optimistic about the job market over the next 12 months, with the Employment Outlook Indicator falling 7.4% on the month to the lowest level since the start of the survey in November 2012.

Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, "The continued decline in consumer sentiment serves as a warning that all is not well in the Indian economy and leads us to question in part the strength of the official GDP data. Our data shows clearly that household finances are under significant pressure with the outlook for the job market deteriorating further."

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