Consumer confidence in India dropped in May, as people fretted about jobs and slowing growth in Asia’s third-largest economy.
The current situation index fell to 97.3 from 104.6 in March, according to the Reserve Bank of India’s consumer confidence survey, where 100 is the dividing line between pessimism and optimism. The future expectations gauge fell to 128.4 in May from a record 133.4, suggesting waning optimism.
“Weakening confidence is primarily attributable to the deterioration in sentiments on the economic situation and employment," the central bank said.
Sentiment returning to pessimistic territory adds to the challenge of policy makers trying to boost consumption and investments in an economy growing at the slowest pace since 2014. The Reserve Bank of India Thursday cut interest rates to the lowest in nine years to support growth and opened the room for more easing by adopting an accommodative stance.
While private investments have been subdued for some time, a slew of indicators from auto sales to air travel show consumption -- which contributes more than 60% to GDP -- has also waned amid a crisis in the shadow banking sector.
The RBI’s consumer confidence survey was conducted in 13 Indian cities and was based on responses from 5,245 households.