RBI surveys show rise in confidence, easing of inflation perception among consumers

RBI surveys show rise in confidence, easing of inflation perception among consumers

Subject : Economy

Section: Monetary Policy

Details:

• 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.
• The ‘future expectations index’(FEI)also improved marginally—by 0.80 points to 116.3 in the latest survey round
• 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 andcore (CPI excluding food and fuel) categories. Food inflation fell to 4.2percent in April, while core inflation moderated to 5.1 per cent.
• On inflation, the RBI survey said households’ median inflation perception for the current period eased by 10 basis points (bps)to8.8percent. Inflation expectations for both three-month and one-year-ahead periods moderated by 10 bps each from theMarch2023level to 10.1 per cent and 10.4 per cent, respectively.
• Consumer Confidence Survey (CCS): o The CCS asks people across 19 cities about their current perceptions and one-year ahead expectations on the general economic situation, employment scenario, overall price situation and own income and spending.
• o Based on the responses, the RBI comes up with two indices: the Current Situation Index (CSI) and the Future Expectations Index (FEI).
• An index below the 100 mark implies people are pessimistic and a value higher than 100 conveys optimism. ▪ The CSI has been recovering since falling to a historic low in July 2021. However, consumer confidence still remains in the negative territory.
• The FEI is in the positive territory but stays below the pre-pandemic levels.
• Inflation Expectations Survey (IES) o It tracks people’s expectations of inflation. ▪ It shows that the households’ inflation perception for the current period has moderated along with their three months and one-year ahead median inflation expectations.