Home / Economy / High inflation fails to deter consumer confidence: RBI

Consumer confidence continues to improve even as most households expect prices to rise further in the coming months, showed surveys conducted by the central bank.

“Consumer confidence has been on recovery path since July 2021 after the impact of the covid-19 pandemic waned; though the current situation index (CSI) remained in negative terrain, it improved in the latest survey round on the back of better sentiments on general economic situation and spending," according to the consumer confidence survey by the Reserve Bank of India (RBI).

The current situation index improved to 80.6 in the September round of the survey from 77.3 in the July round.

The survey, which obtains current perceptions compared to a year ago and one-year ahead expectations on general economic situation, employment scenario, overall price situation and own income and spending across 19 major cities was held between 1 September and 10 September, covering 6,062 responses.

Consumer confidence for the next year, as measured by the future expectations index, remained steady and the expectation at the aggregate level remained close to the level in the previous round, the survey said.

Households expressed pessimism on their current incomes but a majority expect incomes to rise over the next year, according to the survey. The expectations on employment conditions have moderated since the March 2022 survey round but they remain in the positive terrain, it said.

Most households reported higher current spending, which was mainly driven by spending on essentials; nearly three-fourths of the respondents expect further rise in overall spending over the next year while another 20% expect it to remain around the prevailing levels.

The Households’ Inflation Expectations survey from the central bank added that median inflation perceptions for the current period increased by 90 basis points since the July 2022 round to 10.2% in September, while it rose by 50 bps each for both three months and one-year ahead, adding that most categories of respondents expect higher inflation for both three months and one-year ahead periods.

A larger share of households expect higher prices for all product groups as compared to the previous round of the survey.

“Overall prices and inflation expectations for three months ahead period were generally aligned with food products, non-food products and cost of services, while they were more aligned with non-food products and cost of services for the longer horizon of one year," according to the survey.

ABOUT THE AUTHOR

Swaraj Singh Dhanjal

" Based in Mumbai, Swaraj Singh Dhanjal is responsible for Mint’s corporate news coverage. For the past eight years he has been writing on the biggest deals in private equity, venture capital, IPO market and corporate mergers and acquisitions. An engineer and an MBA, he started his journalism career in 2014 with Mint. "
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