Consumer confidence improves on key metrics like employment, economic situation, price and spending, finds RBI survey

Recovery in Consumer Confidence remains steady according to a Reserve Bank of India Survey reeased last week. The survey finds most households reporting higher current spending, which was mainly driven by essential spending. Nearly three-fourths of the respondents expect further rise in overall spending over the next one year and another 20 per cent expect it to remain around the prevailing levels, the survey reveals.

After hitting a low in July 2021 on the back of Covid19 pandemic, Consumer Confidence Index (CCI) has continued its upward move and was recorded at 80.6 in the survey. It was at 77.3 in July 2022.  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, the survey revealed.

Meanwhile, the consumer confidence for the next one year, as measured by the Future Expectations Index (FEI), remained steady and the expectation at the aggregate level remains close to its level in the previous survey round on 5 August.

CSI and FEI are compiled on the basis of net responses on the economic situation, income, spending, employment and the price level for the current period (as compared with one year ago) and a year ahead, respectively. CSI and FEI = 100 + Average of Net Responses of the above parameters. The survey results reflect the respondents’ views, which are not necessarily shared by the Reserve Bank. 

Key Takeaways: 

1) Consumer confidence is on recovery path since July 2021 after the impact of the COVID-19 pandemic waned.

2) 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.

 Source: RBI

Perceptions and Expectations on the General Economic Situation

 Source: RBI 

 Perceptions and Expectations on Spending

3) Households expressed pessimism on their current income but a majority of them expect higher income over the next one year.

 Source:RBI  

4) The expectations on employment conditions have moderated since March 2022 survey round but they remained in positive terrain.

 Source: RBI

5) Consumer confidence for the next one year, as measured by the future expectations index (FEI), remained steady and the expectation at the aggregate level remains close to its level in the previous survey round (Chart 1).

6) Most households reported higher current spending, which was mainly driven by essential spending; nearly three-fourths of the respondents expect further rise in overall spending over the next one year and another 20 per cent expect it to remain around the prevailing levels.

Perceptions and Expectations on Spending

 Source: RBI

7) : Perceptions and Expectations on Spending- Non-Essential Items

Source: RBI  

The survey highlights current perceptions (vis-à-vis 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. The latest round of the survey was conducted during September 01 to September 10, 2022, covering 6,062 responses.