Consumer confidence improves

Swaraj Singh Dhanjal

MUMBAI: The Reserve Bank of India’s latest survey for May showed that consumer confidence improved compared to a year earlier, even though the index remained in the pessimistic zone.

The survey obtains current perceptions compared to a year earlier and one-year ahead expectations on general economic situation, employment scenario, overall price situation and own income and spending across 19 major cities. The latest round of the survey was conducted between May 2 and 11 and it covered 6,027 responses.

“Consumer confidence for the current period has been consistently improving since July 2021; the sentiments on key parameters like employment and household income improved further in the latest round of the survey, though they remained in pessimistic zone,” according to RBI’S Consumer Confidence Survey.

The index for the current period improved to 75.9 from 71.7 in the previous survey in March. Below 100 the index is considered to be in pessimistic territory, while above 100 indicates optimism. To be sure, while current perceptions continued to show improvement, households assessed a rise in their current spending and expected it to increase further over the next one year. Households expect higher essential spending whereas the sentiments on non-essential spending remained downbeat. This also reflected in expectations for the year ahead. “One year ahead outlook of households remained in growth terrain despite marginal moderation in sentiments in the latest survey round,” it showed. The one year ahead index slowed down to 113 from 115.2 in the March survey.

As per the RBI’S Households’

Inflation Expectations Survey, households’ median inflation perception for the current period increased by 40 basis points (bps) when compared to the March 2022 round of the survey, whereas it increased by 10bps and 30bps for three months and one year ahead periods, respectively. “Majority of the households expect general prices and inflation to remain high over three months and one year ahead horizons,” the survey said.

Expectations for overall price and inflation over the next one year were in sync with those for non-food products and cost of services, the survey noted, while three months ahead expectations were more aligned to those for food products and non-food commodities.

CONSUMER CONFIDENCE FOR THE CURRENT PERIOD HAS BEEN IMPROVING SINCE JULY 2021