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The MNI India Consumer Indicator rose for the second consecutive month to 122.5 in November from 120.2 in October, the highest since June, led by an improvement in personal finances.
While the record low seen in September could turn out to be the trough in sentiment, it is not out of the question that confidence could resume its downward trend following the seasonal pick-up of the past two months due to the festive holiday period.
The November rise was driven by an increase in three out of the five components which make up the India Consumer Indicator. Both Current and Expected Personal Finances increased and optimism about Business Conditions in Five Years rose on hopes of an economic revival after the elections next year.
In contrast to the improvement in the long term business outlook, Business Conditions in One Year decreased slightly while Durable Buying Conditions remained unchanged compared with last month.
Although the employment outlook in the next 12 months improved for the second consecutive month, concerns over inflation worsened in November as respondents became increasingly concerned about the current level of prices. The indicator measuring inflation expectations in a year's time hit a record high as consumer price inflation rose yet further in recent months.
Commenting on the latest survey, MNI Indicators Chief Economist Philip Uglow said, “The pick-up in consumer confidence over the past two months was probably due to seasonal factors but the continued high level of inflation and recent interest rate increases could weigh on sentiment ahead.”
“The weak economy, coupled with high interest rates means consumers’ expectations for car and home buying remain at depressed levels,” he added.
