Consumer sentiments in India rose to a new record high in July as respondents were bullish about future prospects for both business conditions and household finances, as per the recent reports.
The GICI (Genesis India Consumer Indicator) – a monthly indicator tracking consumer sentiment pan India across personal finances, business conditions and buying conditions – rose to 62.44 in July from 60.00 in June, marking a new record high in the series.
A result above 50 indicates respondents are optimistic while a reading below 50 indicates that pessimists outweigh optimists.
The only component of the GICI to decrease in July was durable buying conditions, which measures whether respondents viewed it as a good time to buy durable goods.
As per the survey, respondents were postponing purchases to benefit from lower prices post the GST tax reduction.
The GST Council, chaired by Union Finance Minister, last week cut tax rates on white goods as well as various handicrafts items and paints.
“The rise in confidence among Indian consumers continued in July with sentiment hitting a new record high. Due to the nature of the index, the cuts to GST on July 27 actually depressed overall confidence by postponing spending ahead of the tax reduction,” Chief Economist of GMMR, Philip Uglow said during a press release.
Genesis Management and Market Research (GMMR) compiles GICI index. Next month we are likely to see a strong bounce back in the key spending measures as consumers take advantage of lower prices, he added.
In addition to the report, it was analysed that the improving economic backdrop bodes well for the automotive sector.
“Buying conditions for consumer durables are firm and automobile manufacturers should benefit from an increased proclivity for car purchase among our respondents,” Uglow conveyed.
According to government data, Indian economy grew 7.7% in January-March 2018, the biggest expansion in seven quarters at the time, on account of robust performance in manufacturing, construction and service sectors as well as good farm output.
The report further noted that domestic spending on travel will account for some Rs 1.65 trillion over the coming three months across India as a whole, a significant portion of GDP. International spending on travel is expected to total around Rs 1.2 trillion.