Prices increased, incomes hit: RBI’s Consumer Confidence Survey

[] RBI’s recent Consumer Confidence Survey reveals weakened sentiments of consumers when it comes to income, spending, inflation, employment and the general economic situation

According to the Reserve Bank of India’s (RBI’s) ‘Consumer Confidence Survey’, the findings of which were unveiled in June 2020, the economic situation of the country might be deteriorating. Consumers’ confidence is low, with the index for the current situation hitting a historic low, reveals the survey. With respect to future expectations, the index reveals that it may have slipped into a ’zone of pessimism’. The RBI’s recent survey was conducted across 13 cities – Ahmedabad, Bengaluru, Bhopal, Chennai, Delhi, Guwahati, Hyderabad, Jaipur, Kolkata, Lucknow, Mumbai, Patna and Thiruvananthapuram.

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Prices increased, incomes hit: RBI’s Consumer Confidence Survey

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Source: RBI 

What do consumers think about the economic situation?

According to 74.4% of the participants, the general economic situation has worsened and only 14.4% think that it might improve. About 51.4% said that one year on, they expect the overall situation to deteriorate further while 39.6% are optimistic that things may change for the better. Since May 2019, the situation has been grim.

What do consumers think about prices?

Consumers’ perceptions and expectations, vis-à-vis price levels, shows that 79.1% of the participants have felt the pinch of price increase. In May 2019, 81.6% respondents had said that prices had increased. About 75.8% said that even one year ahead, they expected prices to keep rising. In the last quarter, only 3.4% of the participants said that prices have decreased while 17.5% said that prices have remained unchanged.

What do consumers think about their income?

In March 2020, 52.4% respondents said that their income had neither increased nor decreased but by May 2020, a whopping 53.4% of participants said that their incomes had decreased, while 21.4% felt that incomes could fall further even a year ahead. Only 12.6% of the participants said that their income took an upward turn in April to May 2020.

What do consumers think about spending?

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Between March and May 2020, there has been a decrease in the amount people spend. In March, 72.6% said that their spending had increased while in May 2020, only 56.1% said that their spending had increased. About 31% said their spending remained the same while 12.9% said it had decreased. In May 2020, 64.3% of the respondents mentioned that they expect their spending to go up by next year. However, when compared to the last few quarters, the scenario remains gloomy. Overall spending on essential items has increased, said 69.3% of the respondents while 46.4% felt that spending on non-essential items had decreased.

What do consumers think about inflation?

According to those respondents who said that prices have risen or will rise, 74.8% said that inflation has gone up, while 73.4% said that it will increase even after a year. Less than 10% said that inflation had decreased, even though the prices of certain items may have risen.

What do consumers think about the employment scenario?

About 67.4% respondents said that the employment situation had worsened. This was the highest percentage, compared to responses in the last few quarters. While 47.4% felt that the situation could worsen one year on, 41.5% said that it will improve. Less than 15% said the job market has remained the same and will stay so in the next year.

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What is RBI’s Consumer Confidence Survey?

It is a survey to study the consumer perception on the general economic situation, employment scenario and household income. This year, for the March-May 2020 quarter, 5,300 respondents participated in the survey.

Is RBI’s Consumer Confidence Survey accurate?

The RBI uses a sizeable sample population to study perceptions and based on the respondents’ answers, the survey results are released. The Consumer Confidence Survey, started in 2010, has accurately projected the mood of consumers so far.

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Category: Lifestyle

Debora Berti

Università degli Studi di Firenze, IT

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