Highlights

Indian Central Bank RBI recently released its report of Consumer Confidence Survey. According to the report, consumer confidence has dropped to a record low.

The current index dropped to 53.8 in July, 2020 from 63.7 in May 2020. The survey was conducted through telephonic interviews in 13 major cities.

Key results of the survey

  • The consumers were pessimistic about prevailing economic situation, own income and employment scenario.
  • The inflation expectation of households has increased by 60 basis points in July as compared to May this year.
  • The median inflation expectation rose to 9.9 per cent.
  • The Business Assessment Index fell sharply to all-time low of 55.3 in the first quarter from 102.2 in the first quarter.
  • The Business Expectations Index contracted to 99.5
  • The Discretionary spending has reduced in India
  • The employment scenario has degraded along with income
  • The consumers are becoming optimistic towards 2021

Consumer Confidence Survey

The Consumer Confidence Survey (CCS) is conducted by the RBI to find out how optimistic the consumers are in regard to their financial situation. The main parameters of the survey are employment, economic situation, employment, price level, spending and income. It is conducted each and every 2 months.

Indices in the survey

There are two main indices in the CCS. They are Current Situation Index and Future Expectations Index. The Current Situation Index measures the change in consumer perception over an economic issue. The Future Expectations Index measures what consumer think about the main parameters.

The Current Situation Index is 53.8 and the Future Expectations Index is 105.4.

Inflation in India

The Household Inflation Expectation Survey says that the inflation is to rise further in the future. And thus, the central bank will face difficulties to cut interest rates going forward. This survey is being conducted by Reserve Bank of India on bi-monthly basis since 2016.

Forecast

The rural economy may boom in the future because of good harvest season. If the Kharif harvest (like rice) is good, the prices may come down. Also, as more members migrated back to their villages, the per capita income will decline.

Consumer Confidence Survey Facts Box Consumer Confidence Survey Facts Box