The MNI India Consumer Indicator rose 0.8% to125.2 in August from 124.1 in July, boosted by tax breaks in the recent budget and a seasonal boost to spending from the festival season.
Three out of the five components which make up the Consumer Indicator rose between July and August. Durable Buying Conditions hit the highest level since May 2013 and contributed the most to the rise in confidence in August, while a decline in respondents’ optimism about Business Conditions in Five Years had the largest downward impact on sentiment.
The Current Personal Finances Indicator fell to the lowest for more than a year in August with a number of respondents highlighting that their jobs were less secure, chiming with the downturn in the Employment Outlook Indicator. Respondents were more optimistic about their future finances, possibly viewing the budget measures as broadly positive for growth.
Consumers were more confident about the housing market, with the House Prices Expectations Indicator increasing for the third consecutive month to the highest level since March.
Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, “Consumer sentiment remains relatively firm although has plateaued over the past six months. While confidence among businesses has picked up strongly following Modi’s electoral success, it will take time for consumers to feel the benefit. Moreover, the August data provides a number of very mixed signals, including the worrying deterioration in the outlook for employment.”
“While consumers remain concerned about the current level of prices, their expectations for inflation in a year’s time headed downwards in August to sit close to the series’ low. While it’s too soon for the RBI to contemplate easing monetary policy, anchoring inflationary expectations at a lower level is a pre-requisite for rates to be cut.”
