Low Inflation Helps Boost India Consumer Sentiment

MUMBAI, India, March 10, 2015 /PRNewswire/ -- Consumer sentiment improved for the second consecutive month in February, providing a further sign that the extended downturn in confidence has come to an end.

The MNI India Consumer Sentiment Indicator rose to 121.2 in February from 120.4 in January. The rise in consumer sentiment over the past two months has been small but significant following the descent over the past year. While sentiment remains above the 100 breakeven level, meaning optimists outnumber pessimists, it still lies below the series average of 123.3. It's also down 5.2% on the year.

The improvement in consumer sentiment was driven by increasing optimism on the current situation, with both current Personal Finances and Durable Buying Conditions rising. The former, however, is still down more than 7% compared with February 2014. The sharp reduction in inflation has provided greater confidence to consumers when managing their household monthly budget and provided a wealth effect. The January interest rate cut would also have helped and the March reduction should also feed through next month. The survey results showed respondents were the most satisfied with the current level of prices since December 2012, while inflation expectations for 12 months' time declined very close to the lowest in the survey's history.

There was also increased optimism on the automobile market. Consumers expressed a greater willingness to purchase a car in the next 12 months despite the recent withdrawal of tax concessions.

The first full budget of the Modi government came after the survey period was over in February. It wasn't quite the big-bang that many were hoping, although there were a number of positives to take away including plans to invest in developing the country's infrastructure, building on previous pledges by the government to make the country more business friendly. Consumers, though, will soon face higher taxes on phone services, dining out, theatres and air travel.

Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, "Consumer sentiment is still down compared with a year ago but the good news is that the sustained downturn seen over the past year may have finally come to an end.

"The current environment presents a number of positives for consumers including record low inflation and lower interest rates. A further fall in inflation expectations in February suggests the central bank has room to ease rates again over the coming months which should help to underpin sentiment."

For further information, please contact:

Naomi Pickens
Public Relations 
[email protected] 
+1-212-669-6459

Editorial Content:

Philip Uglow
Chief Economist, MNI Indicators 

Notes to Editors

Please source all information to MNI Indicators.

The MNI India Consumer Sentiment Survey is a wide ranging monthly survey of consumer confidence across India.

Data is collected via telephone interviews. At least 1,000 interviews are conducted each month. The survey has been in place since November 2012.

The survey adopts a similar methodology to the University of Michigan survey of U.S. consumer sentiment.

The main MNI India Consumer Indicator is derived from five questions, two on current conditions and three on future expectations:

1. Current personal financial situation compared to a year ago
2. Current willingness to buy major household items
3. Personal financial situation one year from now
4. Overall business conditions one year from now
5. Overall business conditions for the next 5 years

Indicators relating to specific questions in the report are diffusion indices with 100 representing a neutral level, meaning positive and negative answers are equal. Values above 100 indicate increasing positivity while values below show increasing negativity.

About MNI Indicators

MNI Indicators, part of Deutsche Borse Group, offers unique macro-economic data and insight to businesses and the investment community. We produce data and intelligence that is unbiased, pertinent and responsive. Our data moves markets.

For more information, visit our website at www.mni-indicators.com.

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