Consumers are fairly optimistic about employment, income, spending and general economic situations, but see higher inflationary pressures across some major products, for the one year ahead, the latest surveys of the Reserve Bank of India (RBI) showed.
Consumer confidence for the current period remained stable. The current situation index (CSI) remained unchanged at 92.2 from the previous round as higher pessimism on the current general economic situation and employment was counterbalanced by a positive turnaround in sentiment on current income, it said.
“Respondents remained fairly optimistic on the one year ahead prospects for general economic situation, employment, income and spending,” the Consumer Confidence Survey (CCS), released by the RBI, showed.
ADVERTISEMENT
The confidence on general economic and employment conditions was, however, a shade lower vis-à-vis the previous survey round, which led to a moderation of the future expectations index (FEI) within the positive terrain.
Express View | RBI is staying put
CSI and FEI are compiled on the basis of net responses on the economic situation, income, spending, employment and the price level for the current period (as compared with one year ago) and a year ahead, respectively.
“Households’ assessment of current earnings reached its highest level since July 2019 and expectations for future income also improved further,” it showed.
Consumers retained negative sentiments on both current and future price conditions, the survey showed.
ADVERTISEMENT
The survey was conducted from November 2-11, 2023, covering 6,082 respondents, with female respondents accounting for 52.8 per cent of the sample.
On inflation, the RBI’s survey showed that a larger share of households expects higher inflation for both three months and one year ahead.
Also read | High vegetable prices may push up retail inflation in near term: RBI Governor
“Households expect some rise in price and inflationary pressures across major product groups for the year ahead,” the Households’ Inflation Expectations Survey showed. These products include food and non-food products, household durables, cost of housing and services.
ADVERTISEMENT
Expectations regarding overall prices and inflation over the next three months were more aligned with those of food products and services. For the year ahead, such alignment is more pronounced with the prospects for food products and housing segments, the Households’ Inflation Expectations Survey showed.
Households’ perception of current inflation declined by 20 basis points (bps) from the previous survey round to 8.2 per cent in November 2023. One basis point is one-hundredth of a percentage point.
Also read | ExplainSpeaking: What RBI’s surveys tell about India’s economy
The survey was conducted from November 2-11, 2023 in 19 major cities, with responses from 6,036 urban households. Female respondents accounted for 50.1 per cent of this sample.
The consumer price-based inflation (CPI), or retail inflation, eased to 4.9 per cent in October from 7.4 per cent in July. In the monetary policy announced on December 8, RBI Governor Shaktikanta Das said the near-term outlook on inflation is masked by risks to food inflation which might lead to an inflation uptick in November and December.
For FY ’24, the RBI projects CPI inflation to be at 5.4 per cent. The headline inflation for Q1 FY’25 is projected at 5.2 per cent; Q2 at 4 per cent; and Q3 at 4.7 per cent.