Household inflation expectations moderate, consumer confidence grows: RBI

The Reserve Bank of India’s (RBI’s) surveys showed a moderation in household’s inflation expectation while consumer confidence has grown.

Households’ perception for the current inflation declined by 70 basis points (bps) to 8.9 per cent in the latest survey round. Both three months and one year ahead inflation expectations moderated by 30 bps each to 10.2 per cent and 10.5 per cent, respectively, as compared to that in January 2023, a RBI release said.

The March 2023 inflation expectations survey of households was conducted during March 2-11 in 19 major cities with responses from 6,075 urban households. Female respondents accounted for 50.5 per cent of this sample.

“Though the expectations on general prices and inflation remained elevated, a relatively lower share of households expect prices to rise, when compared to the previous survey round,” the survey said.

Consumer confidence continued to recover from the historic low recorded in mid-2021, though it remained in the pessimistic zone —  the current situation index rose by 2.2 points on account of improved perception on general economic situation, employment, and household income.

“With an uptick in current perception, the sentiments on employment are nearing the levels seen around mid-2019; consumers are also optimistic about the employment outlook as more than half of the respondents expect the employment scenario to improve over the next one year,” the RBI said.

The survey showed that household spending was buoyant on the back of higher essential and non-essential spending. More than a third of the households expect a rise in non-essential outlay over the next year.