Indian consumers have become gloomier about the present and less zealous about the future, making them less likely to spend big in an economy driven by domestic consumption.
According to the Reserve Bank of India's consumer confidence survey, where 100 is the demarcation line between pessimism and optimism, the current situation index dipped to 53.1% in March from 55.5% in January.
The survey was conducted through field interviews from February 27 to March 08, 2021, in thirteen major cities, viz., Ahmedabad, Bengaluru, Bhopal, Chennai, Delhi, Guwahati, Hyderabad, Jaipur, Kolkata, Lucknow, Mumbai, Patna, and Thiruvananthapuram.
The respondents to the survey were also less upbeat about the year ahead, with the future expectations index plummeting to 108.8 from 117.1 in the period after review, the RBI noted.
The rationale for the pessimism was degrading sentiments on the overall economic situation, prices, and income, the central bank stated in its survey.
The current situation index, according to the RBI, had touched a record low of 49.9 in September last year.
The survey also indicated towards well-rooted inflationary expectations, which is an additional challenge for monetary policymakers who were compelled to halt interest rate cuts last year because of benefits in price growth.
Tricky underlying price pressures since then have kept the rate-setters from restoring the easing of interest rates, including at their recent meeting that ended on Wednesday, April 7.
Households' median inflation perception for the current period as well as for three months ahead surged by 50 basis points (bps) to 8.7% and by 80 bps to 10.1%, respectively, as against the January 2021 survey, the RBI said.
Median inflation expectations for one year ahead also continued to be at an elevated level.