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Consumer confidence in May plunged to new all-time low: RBI

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Indian consumers’ confidence is plunging to new lows, adding to a sequence of grim economic metrics generated against the background of the world’s worst coronavirus outbreak, says the May 2021 round of the RBI Consumer Confidence survey.

In view of the Covid-19 pandemic, the survey was conducted through telephonic interviews during April 29 to May 10, 2021 in 13 major cities — 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.

Consumer confidence for the current period 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, the survey stated.

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, it added.

CSI fell to a record 48.5 in May from 53.1 in March, according to RBI, where 100 is level that divides pessimism from optimism.

Respondents were also bleak about the year-ahead prospects, with the future expectations index dropping to 96.4 from 108.8 in the period under review, the RBI said.

Household spending also weakened in the latest survey round, RBI said, adding that essential spending was showing signs of moderation while non-essential spending continues to contract.

Households’ median inflation perception for the current period jumped by 150 basis points to 10.2% while the inflation expectation for three months rose by 70 basis points to 10.8%, compared to the March 2021 survey, the survey noted. Median inflation expectations for one-year ahead also remained at an elevated level at 10.9%.