Consumer confidence remains weak but future expectations turn optimistic: RBI report – Times of India

NEW DELHI: Consumer confidence for the month of July continued to remain weak with the current situation index still around all-time low levels, a survey by the Reserve Bank of India (RBI) showed on Friday.
As most households reported lower incomes and higher level of price as compared to a year ago, the current situation index (CSI) showed negative sentiments at 48.6, with minimal signs of improvement compared to 48.5 in May.
However, the consumer confidence survey also showed consumers turning increasingly optimistic about the year ahead with future expectation index (FEI) rising from 96.4 in May to 104 in July.

“Driven by substantial improvements in the outlook for general economic situation and employment scenario after the waning of the second wave of the Covid pandemic, the FEI returned to optimistic territory; respondents placed higher confidence on household income going forward,” the survey said.
The bi-monthly survey studies perceptions and expectations of respondents on general economic situation, employment scenario, overall price situation and their own income and spending levels and 100 is the dividing line between pessimism and optimism.
With the ebbing second wave of Covid-19, economic growth in recent months has shown signs of recovery compared to the massive contraction witnessed in the first wave last year.
After a 7.3 per cent contraction in 2020-21, the GDP growth is expected to pick up in the current fiscal.
While some high-frequency data such as registration of automobiles, electricity demand, non-oil non-gold imports and consumer durables sales have shown quick rebound after easing of the Covid-related containment, RBI believes nurturing growth has to be a priority.
The survey further shows that sentiments on overall spending remained unchanged. Higher spending on essential items were offset by a drop in non-essential expenditure.
It also showed that perception for economic situation improved at -69.1 in July as against -75 in May, while for employment it stood at -68.2 in July as compared to -74.9 earlier. However, both indicators continued to be in negative territory.
Earlier in the day, the RBI kept policy rates unchanged for the seventh consecutive time at 4 per cent and continued with its accommodative stance.