Mumbai Surveys conducted by the Reserve Bank of India (RBI) showed that consumer confidence continued to rise in July while inflation expectations eased. RBI said most of the respondents were optimistic about the overall economic outlook.
The latest Consumer Confidence Survey obtained current assumptions on the general economic situation, employment scenario, price position and income as compared to a year ago and a year ahead expectations, apart from spending trends across 19 major cities. The survey was conducted between July 7 and July 14, covering 6,083 respondents.
“Consumer confidence has continued to improve in consecutive rounds of the survey even after recording a historic low in July 2021, although it remained in pessimistic territory. The Current Situation Index (CSI) rose by 1.4 points on improved sentiment on employment, household income and spending.
The current status index rose to 77.3 in July, from 75.9 in the previous round. According to the survey, consumers expressed optimism about the economic situation and spending outlook for the next year, but this was partially counteracted by some weakness in expectations on employment, household income and price levels in relation to the May 2022 round. As a result, the future expectations index (FEI) recorded a slight improvement from 113 to 113.3. “Most households reported an increase in their current spending and anticipate this trend to continue for the coming year.”
Meanwhile, the Inflation Expectancy Survey of households showed that the average inflation sentiment of households for the current period has come down by 80 basis points (bps) to 9.3% in the latest round. Their three-month and one-year forward average inflation expectations have dropped by 50 bps and 60 bps, respectively, since the May round of the survey.
“Average inflation expectations for most categories of respondents for the current period as well as for the three months and one year ahead are down.”
According to RBI, the share of households expecting higher inflation has declined for all product groups as compared to the previous round. The index for the current perception of spending jumped to 66.3 in the latest survey from 60.9 in the May survey, while the one-year forward perception of spending increased to 68.3 from 66.7.
The current sentiment for earnings levels, while still in negative territory, showed an improvement in sentiment and increased from -18.9 to -17.7, even as the coming year, sentiment on earnings from 44 to 43.3 Fell down slightly.
Survey respondents also showed optimism about employment opportunities, with an improvement in the current perception index from -27.6 to -26.5. Perceptions of general price levels in the economy also showed some improvement, with the index rising from -94.9 to -94.3.
To be sure, while most parameters showed an improvement in sentiment, the current sentiment on the economic situation fell to -41.5 in the July survey, from -40.2 in the previous survey. However, the latest survey raised expectations for the coming year from 6 to 7.6.
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