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Consumer sentiment fell in May to the lowest level since January, as consumers were less optimistic about the future.
The Consumer Indicator declined to 122.1 in May after remaining broadly stable at 125.2 in April. The survey was conducted before the election results were announced although polls had been clearly pointing to a win by the BJP. Consumer sentiment was just below the series average of 123.5 and about 2% below the level seen in May last year.
Four out of the five components which make up the MNI India Consumer Indicator declined. The only component to rise was the Durable Buying Conditions Indicator, showing the majority of consumers were increasingly optimistic about purchasing large household items. Consumers’ confidence regarding their Current Personal Finances remained broadly stable while the majority of respondents still expected future business conditions to be better.
Indian equities have rallied in recent months helped by a growing expectation that the new government will boost economic growth. The Stock Investment Indicator, which gauges whether it is a good time to invest in the stock market, increased significantly to a series high as the continued rise in the stock market made many investors better off. Both foreign and local investors have been investing in stocks in the hope that BJP’s reforms will revive the Indian economy.
Commenting on the latest survey, Chief Economist ofMNI Indicators Philip Uglow said, “May’s fall in confidence has wiped out the gains seen in recent months and pushed confidence down on the year. Our survey was conducted before Modi was elected so we await June’s result to see the impact.”
“Expectations are running high that Modi will boost growth in India. Even with his large mandate, though, Modi has his work cut out to bring his success inGujarat to the nation as a whole,” he added.
