If the latest RBI Consumer Confidence Survey is anything to go by, consumers in India have never been more pessimistic about the nation's economy. As a result, consumer confidence, which has been on a decline since July 2019, has plunged to fresh low in May as the second wave swept far and wide across India with state governments forced to impose lockdowns to contain the virus.
According to the survey, conducted between April 29 to May 10 across 13 cities, the current situation index (CSI)3, fell to a new all-time low as consumer perceptions on general economic situation and employment scenario lowered further. The index fell to a record 48.5 in May from 53.1 in March.
Hundred is level that divides pessimism from optimism. Respondents were also bleak about the year-ahead prospects, with the future expectations index dropping to 96.4 from 108.8 in the period under review, the RBI said.
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Moreover, "the future expectations index (FEI) moved to pessimistic territory for the second time since the onset of the pandemic; this was driven by sharp fall in expectations on general economic situation,
employment scenario and household income over one-year horizon," the survey said.
The survey said that the household spending also weakened in the latest survey round, with essential spending showing signs of moderation while non-essential spending continues to contract. Households also did not have a bright outlook going forward. They expect a higher rise in prices over a one-year horizon when compared to one quarter horizon for non-food products, household durables, housing and services.
In a separate Inflation Expectations Survey of Households, about 60 per cent respondents said they anticipate higher general inflation over the next three months as well as over the next one year.
