Consumer sentiment in India 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, a survey has found.
The MNI India Consumer Sentiment indicator fell 0.9 per cent to 108.9 in February from 109.8 in January. The weaker sentiment followed India reporting reasonable gross domestic product (GDP) numbers.
Chief Economist of MNI Indicators Philip Uglow said, “The more upbeat headline GDP data jars with our own surveillance on how consumers are feeling. Household finances are under significant pressure and respondents remain downbeat about the economy in general.”
In the past 12 months, confidence has fallen nine times. In February it remained very close to December’s record low level.
Views about the current situation fell to a historical low, with the current indicator falling to 105.1.
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 100, as pessimists outnumbered optimists.
Meanwhile, the additional services tax would only serve to dampen spirits, a statement from MNI said. The Budget 2016-17 has proposed to impose a cess, called the Krishi Kalyan Cess, at the rate of 0.5 per cent on all taxable services. The new effective service tax will henceforth be 15 per cent.
"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," the statement added.
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 to purchase large household goods, rose to 114 from 113.5 in the previous month, leaving it 1.2 per cent above last February and 2.6 per cent above the series average.
More 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 from last month expected conditions to improve in the long term.
Uglow, however, said a likely cut in interest rates by the Reserve Bank of India (RBI) shortly could help boost sentiment, although previous moves had only had a short-term upward impact.