Rate Cut Fails To Boost India Consumer Sentiment - MNI India Consumer Sentiment Indicator Stable In June

The MNI India Consumer Sentiment Indicator remained stable at 119.5 in June compared with 119.6 in the previous month, with the Reserve Bank of India’s latest rate cut failing to provide a boost to consumer confidence.
 
Consumer confidence now sits 5.3% down on the year, with all five components of the Consumer Indicator below their respective outturns a year earlier. The three interest rate cuts by the RBI in 2015 appear to have helped halt the trend decline in confidence, with the MNI India CSI remaining broadly stable after falling more than 5% between June and December last year. The latest rate cut of 25 basis points on June 2, however, has not yet trickled down to consumers, though the sequential easing could have some upward impact on consumer sentiment over the coming months.
 
The June survey showed that consumer sentiment remains fragile with consumers increasingly wary of their finances and less inclined to make big-ticket purchases.  The Current Personal Finances Indicator fell by 2.9% to 114.4, the lowest since January. In turn, Durable Buying Conditions eased to a three-month low.
 
One positive outcome from this month’s survey was that consumers were significantly more optimistic about employment conditions over the next 12 months. The Employment Outlook Indicator rose for the third consecutive month as more than 50% of respondents expected the job market to improve. This followed our June business sentiment survey which showed companies increasingly likely to hire over the coming months.
 
Sentiment towards real estate has strengthened since last year as more respondents have expected house prices to rise in the next six months. High mortgage costs, though, have kept house buying sentiment in check.
 
Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, “It is encouraging to see that consumer sentiment has stabilised following the decline throughout 2014. Lower rates from the RBI have helped in this respect, although have so far failed to provide a resounding boost. There are, though, some positive takeaways with the employment outlook improved and current and near-term business conditions trending higher in recent months.” 

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