Consumer sentiment eased slightly in October as the outlook for household finances deteriorated and a growing proportion of consumers refrained from purchasing big ticket items in spite of the festival season.
The MNI India Consumer Indicator declined to 123.7 in October from 124.1 in September, the lowest level since May. Even though consumer sentiment was 3% above the outturn recorded in the same month a year ago, it has been broadly flat this year. A stable consumer sentiment signals that the pick-up in the economy is very gradual and the Modi government’s policies have yet to filter down to Indian households.
Fewer consumers expressed willingness to purchase large household goods in October, pushing the Durable Buying Conditions Indicator to the lowest level in six months. There was a slight improvement in the willingness to spend in the run up to Diwali compared with the previous year when economic conditions were worse, but in general, overall sentiment so far has not received any kick.
While consumers were more satisfied with the current level of prices, with a greater proportion expecting prices to fall in the next 12 months, they were less optimistic about the outlook for their household finances. The weakness could be attributed to uncertainty surrounding the job market, with the outlook for employment declining to the lowest level since the start of the survey in November 2012.
Consumers were, however, increasingly more optimistic about business conditions as the government endeavours to create a more conducive business environment.
Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, “There is a growing gap in the survey between consumers’ more upbeat outlook for business and their increasingly pale views about their own household finances and employment prospects.”
“The mixed signals from our survey add a note of caution to the continued optimism over the outlook for India.”
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MNI India Consumer Indicator Falls In October - Consumers Hold Back Spending During The Festival Season
Date 04/11/2014