Consumer Confidence On Economy, Jobs Plunge To A New All-Time Low

Consumer confidence for the for the month of May weakened further; the current situation index (CSI), which has been in the negative territory since July 2019, fell to a new all-time low as consumer perceptions on general economic situation and employment scenario lowered further.

"Consumer confidence for the current period weakened further; the current situation index (CSI)3, which has been in the negative territory since July 2019, fell to a new all-time low as consumer perceptions on general economic situation and employment scenario lowered further," the Reserve Bank of India said in a consumer confidence survey.

The survey was conducted through telephonic interviews during April 29 to May 10, 2021 in 13 major cities, viz., Ahmedabad; Bengaluru; Bhopal; Chennai; Delhi; Guwahati; Hyderabad; Jaipur; Kolkata; Lucknow; Mumbai; Patna; and Thiruvananthapuram. Perceptions and expectations on general economic situation, employment scenario, overall price situation and own income and spending have been obtained from 5,258 households across these cities.

What is worrying is that the future expectations index (FEI) moved to pessimistic territory for the second time since the onset of the pandemic; this was driven by sharp fall in expectations on general economic situation, employment scenario and household income over one year horizon, the RBI survey showed.

Household spending also weakened in the latest survey round, with essential spending showing signs of moderation while non-essential spending continues to contract.

Most analysts have also lowered India's GDP forecast for 2021-22, after the second round of Covid-19 infections. In fact, the Reserve Bank of India itself lowered the forecast by 100 basis points, while delivering the Monetary policy on Friday.