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Indian Household Finances at Record Low

MNI India Consumer Sentiment Improves Slightly in January
MNI
2015-02-05 12:15 2203

NEW DELHI, Feb. 5, 2015 /PRNewswire/ -- Consumer sentiment rose for the first time in five months in January, although this masked an underlying negative tone to the report with household finances under significant pressure.

The MNI India Consumer Indicator rose to 120.4 in January from 119.6 in December. If not for a large seasonal boost from the winter sales, which caused a spike in purchases of large household items, sentiment would have fallen. Despite the rise in the Durable Buying Conditions Indicator, overall consumer sentiment was still down 0.7% on the year.

The remaining four components that comprise the MNI India CSI fell between December and January. In spite of the recent slowdown in inflation, household finances remained squeezed with households' reporting current finances at a record low. Expectations for the coming 12 months also turned down.

Respondents cited higher family expenses as the main reason for the worsening of their finances, while a growing proportion thought that it was due to a fall in their income. As a result, consumers were left with much less to save, with 49% of respondents saving between 1-29% of their monthly household income in January, significantly lower than last year's 63%.

There was, however, some good news surrounding the job market. More than half of consumers had a more optimistic outlook for their employment prospects. A strengthening in the labour market has also been observed in our sister business survey which showed that companies were more willing to expand their workforce.

Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, "Headline consumer sentiment was up a little, but scratch below the surface and our survey continues to show Indian household finances are under pressure."

"The current level of sentiment is consistent with further monetary easing from the central bank. The recent upward revision to GDP growth in 2013-14 and expected revisions to subsequent quarters on February 9 means the timing of any further policy action is currently up in the air."

For further information, please contact:

Naomi Pickens
Public Relations
naomi.pickens@deutsche-boerse.com
+1-212-669-6459

Editorial Content:

Philip Uglow
Chief Economist, MINI 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 Börse 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.

Source: MNI
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