March Rate Cut Boosts Consumer Sentiment in India
MNI Consumer Sentiment Indicator at Six-Month High in April
MUMBAI, India, May 6, 2015 /PRNewswire/ -- The MNI India Consumer Sentiment Indicator rose by 3% to 122.1 in April from 118.5 in March with respondents more optimistic about their current circumstances, underpinned by the recent easing in the key interest rate by the Reserve Bank of India in March.
Having fallen throughout most of 2014, sentiment has stabilised in recent months with the latest increase leaving consumer confidence at the highest since October 2014. This could mark a turning point in sentiment as consumers have reacted positively to the two cuts in benchmark interest rates since the start of the year.
Consumers' assessment of current conditions rose to a seven-month high of 115.7 in April. There was also greater optimism about the future, with the Expectations Indicator rising for the first time this year.
While overall consumer sentiment was above the 100 breakeven level, meaning that optimists outnumbered pessimists, it was still down 2.5% on the year and below the series average of 123.1.
With consumers feeling financially better off in April, more of them were willing to shell out on large household items. The Durable Buying Conditions Indicator rose to a seven-month high of 113.0 in April, up 6.2% on the year. There was also good news for the automobile industry as consumers were more enthusiastic about making a car purchase in the next 12 months as the cut in benchmark rates lowered borrowing costs.
Respondents were more satisfied with the current business environment in April. The Current Business Conditions Indicator was up by 7.5% on the year. This was in contrast with expectations for future business conditions as Expectations for Business Conditions in One Year and Five Years were both down by 2% and 4.8% on the year respectively.
Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, "Consumers have reacted positively to the two cuts to official interest rates since the start of the year with the MNI India Consumer Sentiment Indicator hitting a 6-month high in April. While confidence is still below the series average, the stabilisation in sentiment in recent months following the 2014 slide could well mark a key turning point."
"Following the recent fall in equity prices in April, respondents judged stocks to be correctly priced. With the vast majority reporting that they expected equity prices to rise over the coming three months, we could see more retail investors tempted into the market, increasing participation from a very low level."
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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.
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