Urban, rural consumer confidence dips as price concerns persist: RBI survey

Households became more cautious about the economy, jobs and inflation in July, though they remained optimistic about income growth and spending, RBI's latest surveys showed

Consumer confidence weakened across both urban and rural India in July, with households becoming more cautious about the current economic situation, employment prospects and inflation, according to the Reserve Bank of India's (RBIs) latest consumer confidence surveys.

 

The RBI on Wednesday released the July round of its bi-monthly Urban Consumer Confidence Survey (UCCS) and Rural Consumer Confidence Survey (RCCS). The surveys gauge households' assessment of the current economic situation compared with a year ago, as well as their expectations for the year ahead on the economy, employment, prices, income, spending and inflation.

 

The urban survey covered 5,987 respondents across 19 major cities, while the rural survey covered 8,581 respondents in rural and semi-urban areas across all states and three Union territories. The RBI conducted both surveys between July 11 and July 20, 2026.

 

 

Confidence declines in both urban and rural India

 

The surveys found that consumer sentiment weakened in both urban and rural households as they became less positive about present economic conditions.

 

In urban centres, the Current Situation Index (CSI) fell to 88.3 from 90.7 in May. The Future Expectations Index (FEI) also eased to 115.3 from 118.7. However, the FEI remained above the neutral level of 100, indicating that consumers continue to expect conditions to improve over the coming year.

 

Rural consumer confidence also weakened. The CSI moderated to 91.7 from 95.2, while the FEI declined to 113.6 from 119.3, suggesting that households viewed current conditions less favourably but remained optimistic about the year ahead.

 

Economy and jobs weigh on consumer sentiment

 

Households across both urban and rural India reported a weaker assessment of the economy and labour market.

 

In urban areas, the net response on the current general economic situation deteriorated to -23.4 in July from -16.5 in May, suggesting that a larger share of respondents believed the economic conditions have worsened. The employment indicator also weakened, with the net response falling to -21.9 from -14.4, indicating growing concern about job conditions. Expectations for the coming year also moderated. The net response on the future economic situation eased to 11.1 from 19.5, while employment expectations slipped to 15.1 from 21.8.

 

Rural households echoed the same concerns. The net response on the current economic situation dropped to -11.9 from -2.5, while the employment indicator declined to -8.0 from -1.2, reflecting a deterioration in perceptions of both the economy and job opportunities. Expectations for the coming year also softened, with the net response for the economy easing to 15.7 from 28.5 and employment to 22.6 from 29.8, though both remained in positive territory.

 

Inflation remains a key concern

 

Price pressures continued to weigh on consumer sentiment in both urban and rural India.

 

Among urban respondents, the net response on current prices deteriorated to -92.7 from -90.7, while one-year-ahead price expectations weakened to -74.9 from -71.5. The increasingly negative readings indicate that an majority of households continued to report higher prices and expected inflationary pressures to persist over the next year.

 

Rural households also remained concerned about inflation. The net response on current prices slipped to -90.5 from -90.0, while one-year-ahead expectations declined to -79.1 from -76.6.

 

Income outlook softens

 

Despite weaker confidence in the economy, households continued to expect incomes to improve over the next year, although optimism moderated, particularly in rural India.

 

In urban areas, the net response on current income improved marginally to 1.9 from 0.9, indicating that slightly more respondents reported higher incomes than lower incomes compared with a year ago. However, expectations for income growth over the next year eased to 45.8 from 47.1, signalling that consumers were somewhat less confident about future earnings.

 

In rural India, income sentiment weakened more noticeably. The current income net response fell to -8.7 from -5.8, indicating that more households reported a decline in income than an increase. Expectations for the coming year also moderated to 32.1 from 38.9, although the positive reading suggests rural households still expect incomes to improve overall.

 

Spending intentions remain resilient

 

Despite weaker confidence in the broader economy, households continued to indicate a willingness to spend.

 

Urban consumers reported stronger current spending, with the net response rising to 77.3 from 74.0, while expectations for spending over the next year increased to 79.7 from 76.6. This suggests that consumers continue to support consumption despite concerns about the economy and inflation.

 

The trend was similar in rural India, where the current spending net response increased to 77.4 from 75.4, while one-year-ahead expectations edged up to 76.9 from 76.0, pointing to resilient consumption demand.

 

Essential spending stays strong; discretionary spending improves

 

Households continued to prioritise essential purchases while gradually increasing discretionary spending.

 

In urban India, the net response for current spending on essential items rose to 86.7 from 83.2, while expectations for the year ahead improved to 85.8 from 83.2, indicating that spending on necessities remains robust.

 

Among rural households, current spending on essential items increased to 81.6 from 80.6, while one-year-ahead expectations edged up to 81.1 from 80.1, reflecting stable demand for essential goods.

 

Discretionary spending also improved. Urban households reported a turnaround in current spending on non-essential items, with the net response rising to 3.3 from -0.8, indicating that more consumers increased such spending than reduced it. Expectations for the coming year also strengthened to 18.3 from 15.9.

 

In rural India, the current net response for non-essential spending rose to 32.4 from 30.1, while one-year-ahead expectations remained broadly unchanged at 42.5, compared with 42.6 in May, suggesting that rural consumers continue to expect discretionary spending to remain resilient.