MNI India Consumer Sentiment Lowest Since Sep 2013

MUMBAI, India, April 8, 2015 /PRNewswire/ -- The MNI India Consumer Sentiment Indicator fell to 118.5 in March from 121.2 in February, the lowest level since September 2013 when the economy was mired in a currency crisis. The fall in consumer sentiment wiped out the gains made over the previous two months, raising doubts about the pace of recovery of the economy.

Tax measures announced in the Budget may well have dented sentiment. A hike in the service tax will make going to restaurants, beauty salons, theatres, amusement parks as well as air travel and phone services more expensive. The fall in sentiment also came in spite of the early March rate cut by the central bank which came early in our survey period.

All five components of the Consumer Indicator declined in March, led by a fall in the Durable Buying Conditions Indicator which provides a guide to consumer spending. Lower levels of inflation and interest rates are seemingly not convincing consumers to shell out on big-ticket items. Both measures of Personal Finances, current and expected, declined in March with the latter leading the decline and falling to the lowest since September 2013.

While overall consumer sentiment remains above the 100 breakeven level, meaning that optimists outnumber pessimists, it still lies below the series average of 123.1 and was down 5.8% on the year.

The Budget at the start of the month failed to increase optimism that the new government will put in place policies to tackle India's economic issues over the long-term. Expectations for Business Conditions in Five Years fell to the lowest since October 2013. Expectations for conditions in a year's time also dropped and continue to run below the average seen throughout 2014 and the long-run average.

Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, "The March survey was disappointing with consumer sentiment resuming its downward trend. Consumers have seemingly reacted negatively to the announcement of the service tax hike in the budget and have also become more pessimistic about the long-term economic outlook."

"While the Reserve Bank of India chose to leave interest rates unchanged at its April meeting, our survey evidence from both consumers and businesses suggests downside risks to growth are increasing. On balance we expect the central bank to ease monetary policy further over the coming months."

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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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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.

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