In more signs of worsening economic woes, the consumer confidence in the country has dipped to a five-year low. According to the latest consumer confidence survey released by the RBI, the current situation index fell to 85.7 in November from 89.4 in September, the sharpest dip since 2014, the year the first Narendra Modi government came to power.
It is to noted that in the consumer confidence index, 100 is the dividing line between pessimism and optimism. The future expectations index (FEI) also fell to 114.5, down from 118 in September, signalling that while the sentiments have weakened, the year ahead expectations are still in the optimistic terrain. "Consumers’ sentiments on the general economic situation and the employment scenario weakened, but their one-year ahead expectations remained in the optimistic terrain for all parameters, except prices; expectations on income one-year ahead improved marginally over the previous survey round," the RBI survey stated.
While most respondents perceived prices as having increased during the last one year, they also expect prices to rise further in the year ahead. As a result, the household sentiments on overall spending has remained resilient.
The survey, which gauges the perceptions and expectations on the general economic situation, employment scenario, overall price situation and own income and spending, was obtained from 5,334 households across 13 major cities in India.
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Last month, a yet to be released expenditure survey conducted by the National Statistical Office (NSO) that consumer spending in India has fell for the first time in more than four decades in 2017-18. However, the government soon released a clarification saying the NSO report was held back from official release due to ‘data quality issues’.
India's GDP growth rate in July-September slowed to a six-year low of 4.5 per cent on a slump in manufacturing and drop in consumer demand.