BackConsumer confidence on recovery path in Nov: RBI
Even the current perception around employment reported a sequential improvement
PremiumNEW DELHI : Consumer confidence among Indian households continued to improve in November even though it remained in the pessimistic zone, the Reserve Bank of India (RBI) said in its consumer confidence survey released on Wednesday.
However, in what could spell positive news for consumption in general, consumer outlook on discretionary spending moved to the positive territory for the first time since the onset of covid.
“Consumer confidence for the current period has continued on its recovery path after the second wave of the covid-19 pandemic, though it remained in the pessimistic zone; the current situation index (CSI) improved further on account of better perceptions of the general economic situation, employment and household income," the central banker said.
The survey, conducted between 2 November and 11 November and covering 6,089 responses, mapped current perceptions among consumers and one-year ahead expectations on the general economic situation, employment scenario, overall price situation and own income and spending across 19 major cities. The findings of the previous survey were for the month of September.
Current consumer perception about the economic situation reported signs of improvement compared to the last round conducted in September. The current perception around employment, too, reported sequential improvement.
However, the current perception of consumer spending remained unchanged in November.
“The current sentiment on overall spending remained close to its level in the previous survey round, though the year-ahead outlook improved marginally. The outlook on discretionary spending moved to positive terrain for the first time since the onset of the pandemic," it said.
On Wednesday, the RBI cut its FY23 GDP growth rate forecast to 6.8% from 7% previously. It also raised the repo rate for the fifth time in a row. RBI governor Shaktikanta Das, however, said that the Indian economy remains resilient. “In this hostile international environment, the Indian economy remains resilient, drawing strength from its macroeconomic fundamentals. Our financial system remains robust and stable," the governor said in a separate statement. However, he added that inflation remains “elevated" in most parts of the world.
Consumer price inflation moderated to 6.8% in October as expected, but it still remains above the upper tolerance band of the target, he said.
Consumers are, however, more optimistic about their overall economic well-being over the next 12-month period. “One year ahead outlook, as measured by the future expectations index, also improved, after remaining steady in the previous three survey rounds," the survey found. Overall, households displayed less pessimism on the prevailing employment conditions vis-à-vis the previous survey.
Meanwhile, 87.5% of consumers said their perception of current inflation increased; however, the figure is lower than the September findings when 89.6% of consumers reported a jump in inflation. Over the next 12 months, 82.9% of respondents expect inflation to increase.
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