Urban consumer confidence perks up; rural stays flat, says RBI survey

Inflation expectations dip across households

Consumer confidence perked up in November among those living in urban areas against the previous month owing to improved sentiments on price and general economic situation, according to the Reserve Bank of India’s (RBI’s) forward-looking surveys.

 

The trend, however, was different among rural inhabitants, where the consumer confidence for the period under review remained almost at the same level of the previous survey round.

 

The survey showed the Current Situation Index (CSI) for urban areas rose from 96.9 in September to 98.4 in November. As for rural regions, while remaining in the optimistic zone, it declined from 100.9 in September to 100.8 in November. 

Looking a year ahead, urban consumers remained highly optimistic. The Future Expectations Index (FEI) rose by 0.6 points to 125.6 in November.

 

On the back of easing price pressures, urban households’ current perception on essential spending moderated sharply.

 

Similar trend was observed for future essential spending as well. However, there was some increase in expectations on non-essential spending in future.

 

Positive sentiments on the current price level and inflation picked up. On a similar trend, households in urban areas expect a decline in both price and inflationary pressures over the coming year, a RBI survey showed.

 

For rural consumers, FEI showed further improvement within the optimistic zone. The share of rural households’ anticipating decline in prices and inflation have increased for the current as well as year ahead in the latest survey round.

 

The rural households’ current perception of inflation declined significantly by 130 basis points (bps) to 4.6 per cent in the current round of the survey. Moreover, their expectation for the year ahead also reduced by 150 bps to 6.1 per cent, RBI said.