Consumer confidence rises in India

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Indian consumers in a retail store

Consumer sentiments in India rose for the first time in the last four months by 1.2 per cent to 109.8 in January as households have been relatively upbeat about the purchasing environment, says a Deutsche Borse report.

The MNI India Consumer Sentiment Indicator fell for four consecutive months since September to 108.5 in December 2015 on the back of deterioration in personal finances amid rising inflation.

While sentiment remains above the 100 level, meaning optimists still outnumber pessimists, it has fallen 8.8 per cent over the past year.

“Following four consecutive declines in headline sentiment, the latest survey provides a tentative sign of stabilisation,” the report said.

Despite wavering confidence in household finances, prices and the general economy, households have been relatively upbeat about the purchasing environment, it added.

“This was the first increase in the MNI India Consumer Sentiment Indicator since August last year and in that respect it is most welcome,” MNI Indicators Chief Economist Philip Uglow said.

“While more positive views on buying conditions would usually point to higher consumer spending ahead, it sits against a backdrop of weak and still falling sentiment on personal finances and the current business environment,” he said.

The report further noted that when asked about the status of the job market since the Narendra Modi-led NDA government came to power, 32.6 per cent respondents were uncertain about the impact of the governments’ policies on the job market, while 27.6 per cent said that there had been no change in the employment market.

However, it said, about a quarter of respondents thought that the job market had improved, with a mention of the “Make in India” programme. There was also 14.4 per cent respondents who thought that it had worsened.

Moreover, there was a drop in confidence in household finances, with current measure falling to record low.

Almost 94 per cent respondents said they used the majority of their income on daily expenses, with very little left to save or invest.

“A rise in inflation has made matters worse with consumers increasingly dissatisfied with current prices,” it said.

Consumers also revised down their expectations for business conditions in a year’s time were more downbeat in their perception of the current business environment in January.

 

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