Mumbai: The latest round of consumer surveys conducted by the Reserve Bank of India (RBI) for May has shown an improvement in consumer confidence and easing of inflation expectations.
The ‘current situation index’ (CSI) improved by 1.5 points from the previous survey round to 88.5 on the back of improved assessment for all the survey parameters, barring essential spending.
“Respondents remained optimistic on general economic situation in the year ahead,” the RBI said. The ‘future expectations index’ (FEI) also improved marginally — by 0.80 points to 116.3 in the latest survey round.
Households’ perception on the general economic situation has been improving steadily since September 2022. Their year-ahead outlook has also been on the up, notwithstanding a marginal dip in March 2023. With a substantial improvement in May 2023, households’ sentiment on current income inched closer to the neutral zone and they remain fairly optimistic on employment conditions and future earnings over the next year, the RBI said.
On inflation, the RBI survey said households’ median inflation perception for the current period eased by 10 basis points (bps) to 8.8 per cent. Inflation expectations for both three-month and one-year-ahead periods moderated by 10 bps each from the March 2023 level to 10.1 per cent and 10.4 per cent, respectively.
Among respondent categories, inflation expectations of retired persons were the highest. As compared to the last survey round, the share of households expecting prices to rise has come down for both the time horizons. “Three months and one year ahead expectations on overall prices had highest coherence with respondents’ perception on cost of services,” the central bank said.
The survey was conducted during May 2-11 in 19 major cities, with responses from 6,068 urban households.
Headline CPI inflation has come down to 4.7 per cent in April, the lowest reading since November 2021. Monetary policy tightening and supply side measures contributed to this process. The easing of inflation was observed across food, fuel and core (CPI excluding food and fuel) categories. Food inflation fell to 4.2 per cent in April, while core inflation moderated to 5.1 per cent.
Agencies