Rising inflation, slackening demand and gloomy employment conditions continue to hurt consumer sentiment, which was down 3.5 per cent in August as measured by the Boston Analytics Consumer Sentiment Index.

The index, created by knowledge services firm Boston Analytics, is a monthly barometer of the Indian consumer opinion on the state and expectations of the macro economy, household financial conditions and consumption, and based on a monthly survey of 4,550 respondents across seven cities.

The primary drivers of the decline were decreases in respondents' confidence in the economy and in employment conditions. Sentiments related to inflation have remained pessimistic since the beginning of the year, but fell sharply in August.

Despite the expected increase in household income, the consumer spending index recorded a marginal decline in August. "The urban consumer in India is clearly telegraphing significant concern about the future of the Indian economy," said Sam Thomas, Boston Analytics' director of research and development.

Boston Analytics' consumer sentiment index consists of two sub-indices: The current situation index and the expectation index, and five other indices covering employment conditions, inflation, real estate, savings, and consumer spending.