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Consumer confidence remains grim in Nov, optimism intact for year ahead: RBI

Weak confidence was attributed to the consumer sentiments on general economic situation, employment scenario, price levels and household incomes

Chitranjan Kumar | December 5, 2020 | Updated 00:19 IST
Consumer confidence remains grim in Nov, optimism intact for year ahead: RBI
RBI consumer confidence index (based on the current situation) improved marginally to 52.3 in November

Consumer confidence remained quite low in November compared to the year ago period as the general economic situation continued to remain grim during the month, reveals a latest survey by the Reserve Bank of India. The Indian households, however, remained optimistic about the situation one year from now.

Weak confidence was attributed to the consumer sentiments on general economic situation, employment scenario, price levels and household incomes.

The consumer confidence index (based on the current situation) improved marginally to 52.3 in November, against an all-time low of 49.9 in September, the survey report noted.

"Consumer confidence remained very low in November 2020 when compared to a year ago, as reflected in the current situation index (CSI), though it showed a marginal improvement over the all-time low recorded in the previous round," the RBI report highlighted.

However, the index (based on future situation) remained stagnant in growth terrain at 115.9 on a one-year ahead expectations basis, indicating a recovery in the economy going ahead.  

Also Read: RBI now looks up to govt, winter to control inflation

As per the survey, consumers reported higher essential and overall spending, though they saw curtailment in discretionary expenditure during the month under review. Consumers, however, expect non-essential spending to contract further in the coming year.

The survey report was compiled on the basis of net responses on the economic situation, employment scenario, overall price situation and personal income and spending for the current period and a year ahead, respectively. It was conducted across 5,319 households in 13 major Indian cities.

Meanwhile, surveys on households' inflation expectations showed that it moderated for both three months and one year periods. Indian households' perception of median inflation for the three months ahead and one year ahead moderated by 30 and 20 basis points, respectively, though they remained at an elevated level.

Also Read: RBI red flags 'large margins charged to consumer' as reason for high inflation

Households' median inflation perception for the current period fell sharply by 100 basis points as compared to the September 2020 round, it showed.

"More households expect general prices to rise in the next three months and one year ahead periods but the share of respondents expecting higher prices for non-food products came down marginally," the RBI households' inflation expectations survey noted.

Also Read: RBI revises FY21 GDP target to -7.5% amid surge in rural, urban demand

According to another survey on macroeconomic indicators, India's real gross domestic product (GDP) is likely to contract by 8.5 per cent in the current financial year (FY21), but it is expected to rebound next year, when it is expected to grow by 8.2 per cent. The growth projections for both the years were revised upwards from the last round.  

Despite expansion in agricultural activities, real gross value added (GVA) is expected to decline by 8.2 per cent in FY21, while it is likely to record 9.1 per cent growth next year, supported by improvements in industrial and services activities.

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