Consumer confidence at 6-year low: RBI

Indian consumers’ perception on the general economic situation, the employment scenario and price rise has dipped to a six-year low in September, according to a Reserve Bank of India survey conducted across 13 major cities, including Bengaluru, from a sample of 5,192 households.

The survey findings, which come in the backdrop of the central bank cutting its FY20 GDP growth projection to 6.1% in its latest round of monetary policy review from 6.9% earlier, may pose a severe challenge before the government trying to use all firepower to kick-start the economy.

Consumer confidence, as reflected in the current index, declined to 89.4 in September. The last time it dropped to this level was in September 2013 when the previous UPA regime was mired in corruption and the general election of 2014 was round the corner. It has hit the lowest under Prime Minister Narendra Modi’s entire tenure

RBI conducts this survey once in three months and in the last one in June, consumer confidence was at 95.7. The index above 100 gives an optimistic perception of the consumers.

In the current round of the survey, nearly 48% of the respondents said the general economic situation had worsened. Only 33% were of the view it had improved. The number of those who expected the economic situation to improve in a year was less than those who expected an improvement three months ago.

The survey also showed people were less optimistic about their incomes and employment in the one year ahead period. It showed boosted sentiments on overall spending, but consumers were less optimistic about discretionary spends.

The consumer confidence index (CSI) takes five variables — economic situation, employment, price level, income and spending and obtains responses from urban households on the prevailing situation and their expectations one year after.

It was conducted soon after the country’s June quarter economic growth slumped to 5% and according to experts, captured the true sentiments of households.

The cities in which households were polled included Ahmedabad, Bhopal, Delhi and Mumbai among others.

The Consumer Confidence survey has two main indices — current situation index and future expectations index. The current situation index measures the change in consumer perception over an economic issue in the last one year while the future expectations index measures what the consumer thinks about the same variables, one year ahead.