BackPandemic crushed consumer confidence to the lowest ever
The January bulletin of RBI says covid affected sentiment of Indian households across strata
PremiumMUMBAI : Consumer confidence in India reached historic lows after the outbreak of pandemic influenced the sentiments of households across strata, according to the January Bulletin of Reserve Bank of India released today. Amongst the survey indicators, household income was impacted the most by the pandemic induced restrictions, causing consumer confidence to hit multiple lows during this period.
Analysis reveals that the consumers’ perception about the prevailing situation is severely impacted by the pandemic, while the expectations about the future have been relatively optimistic, despite being dented in successive rounds. The effect of lower incomes is seen on consumers’ perception about general economic situation and employment as well, the Bulletin said.
“With the proactive steps taken by the Government and other public authorities, along with the ongoing vaccination programme, expectations have recovered relatively faster than perceptions," it added.
Most countries, which witnessed a major slump in confidence when the pandemic first hit, is yet to return to pre-pandemic levels in most countries. Rising rates of vaccination may help in recovery, but repeated bouts of COVID-19 are expected to have an impact on consumer confidence, especially with the associated uncertainty regarding business and employment situation, the Bulletin said.
“Sustained momentum in the ongoing reform measures by the Government may help in improving the employment and income situation amongst households, leading to a gradual recovery in consumer confidence," it said.
Despite low perception of the prevailing situation, respondents’ expectations for the year ahead showed faith in economic recovery after subsidence of the pandemic
Major countries conduct consumer confidence surveys which provide timely and forward-looking measures of economic uncertainty to formulate suitable policy measures
According to the Bulletin, overall economic activity in India therefore remains strong, with upbeat consumer and business confidence and upticks in several incoming high frequency indicators.
Monetary and credit conditions are also improving with bank credit picking up in a gradual but sustained manner, it said.
“The global outlook remains clouded by considerable uncertainty. Inflation continues to mount across geographies amidst disruptions in production, supply chains and transportation. Consequently, the divergence between monetary policy stances across jurisdictions has widened. There are indications that supply chain disruptions and shipping costs are slowly easing, although the waning of inflation may take longer. This provides a window of opportunity to focus all energies on accelerating and broadening the global recovery," RBI said in its bulletin.
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