India Consumer Sentiment Falls in February: MNI India Consumer Sentiment Indicator

Household Finances Under Extreme Pressure

Consumer sentiment fell slightly in February, partly offsetting last month's rise as consumers reported a further deterioration in their personal finances and saw little hope of a turnaround in them or in the wider business environment in the long-term.

The MNI India Consumer Sentiment Indicator fell to 108.9 in February from 109.8 in January. While sentiment remained above the 100 level, meaning optimists outnumbered pessimists, it was 10.1% down on the year and stands 7.4% below last year's average.

In the last 12 months, confidence has fallen nine times and in February, it remained very close to December's record low level. The MNI India Consumer Survey shows that not all is well with the Indian economy, with household finances under extreme pressure along with a poor outlook for business conditions. Views about the current situation fell to a historical low, while the Expectations Indicator, which is made up of three forward-looking components, eased slightly to 111.4 from 111.6 in the previous month, just a touch above December's series low of 110.6.

Respondents assessment of household finances worsened, with the current measure falling to a series low of 96.2. This is the first time in the history of the survey that the indicator has fallen below the 100 mark, as pessimists outnumbered optimists.

Despite their wavering confidence in household finances and the general economy, households have been relatively upbeat about the purchasing environment. The Durable Buying Conditions Indicator, which measures consumers' willingness topurchase a large household good, rose to 114.0, 1.2% above last February and 2.6% above the series average.

Optimistic views on the buying environment contrasted sharply with the perception of the business environment. The Current Business Conditions Indicator remained very close to January's low, while fewer respondents expected conditions to improve in the long-term.

Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, "The more upbeat GDP data jars with our own surveillance on how consumers on the ground are feeling. Household finances are under significant pressure and respondents remain downbeat about the economy in general."

"A likely cut in interest rates from the RBI could help to boost sentiment, although previous moves have only had a short-term upward impact. Meanwhile, the additional tax on services will only serve to dampen spirits further."

Powered by Capital Market - Live News