The MNI India Consumer Sentiment survey revealed that while India Inc is bullish on Prime Minister Narendra Modi, with sentiment rising during 2014, he has still not won over a majority of the consumers.
MNI Indicators is part of MNI, a wholly-owned subsidiary of exchange organisation Deutsche Borse AG. The MNI India Consumer Indicator fell by 1.1 per cent to 119.6 in December from 120.9 in November, the lowest in 15 months.
“This was a very disappointing end to the year with consumer confidence falling for the fourth consecutive month,” said Philip Uglow, Chief Economist of MNI Indicators. “Coming on the back of other mixed economic data, the authorities need to be increasingly vigilant to the risk of the recovery stalling.”
The dip in sentiment was led by the consumer durables despite the low level of inflation. Consumers were seemingly more concerned about the current state of their household finances which fell to the lowest in 17 months, it showed.
Of the five components that contribute to the MNI India CSI, only the ‘Business Conditions in a Year’ índicator improved in December. The survey, however, highlighted a growing divergence between consumers’ deteriorating assessment of their own finances and their more optimistic views on the outlook for the economy. Also, ‘car purchase expectation’ component fell to a record low with almost 35 per cent of consumers believing it would be a bad time to purchase a car in the next 12 months. The survey states that the Centre’s decision to discontinue the excise tax concessions on the automobile sector will further undermine buying sentiment.
“The recent positive news on inflation opens the door for the Reserve Bank of India to ease off the monetary brakes and cut interest rates in the next few months. This would help to underpin consumption and support growth in the economy over 2015,” he said. The MNI Indicator is derived from questions on current personal financial situation, willingness to buy major household items, overall business conditions one year from now and for the next five years.