Indian Household Finances At Record Low - MNI India Consumer Sentiment Improves Slightly In January

Consumer sentiment rose for the first time in five months in January, although this masked an underlying negative tone to the report with household finances under significant pressure.
 
The MNI India Consumer Indicator rose to 120.4 in January from 119.6 in December.If not for a large seasonal boost from the winter sales, which caused a spike in purchases of large household items, sentiment would have fallen. Despite the rise in the Durable Buying Conditions Indicator, overall consumer sentiment was still down 0.7% on the year.
 
The remaining four components that comprise the MNI India CSI fell between December and January. In spite of the recent slowdown in inflation, household finances remained squeezed with households’ reporting current finances at a record low. Expectations for the coming 12 months also turned down.
 
Respondents cited higher family expenses as the main reason for the worsening of their finances, while a growing proportion thought that it was due to a fall in their income. As a result, consumers were left with much less to save, with 49% of respondents saving between 1-29% of their monthly household income in January, significantly lower than last year’s 63%.
 
There was, however,some good news surrounding the job market. More than half of consumers had a more optimistic outlook for their employment prospects. A strengthening in the labour market has also been observed in our sister business survey which showed that companies were more willing to expand their workforce.
 
Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, “Headline consumer sentiment was up a little, but scratch below the surface and oursurvey continues to show Indian household finances are under pressure.”
 
“The current level of sentiment is consistent with further monetary easing from the central bank. The recent upward revision to GDP growth in 2013-14 and expected revisions to subsequent quarters on February 9 means the timing of any further policy action is currently up in the air.”

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