Consumers Sentiment Perked Up In December, Shows RBI Survey
RBI’s forward looking surveys show a pick-up in consumer sentiment and a fall in inflation expectations
Consumer sentiment picked-up at the end of 2018 with Indians feeling more optimistic about employment conditions and income levels, shows a survey conducted by the Reserve Bank of India.
According to the RBI’s consumer sentiment survey, released on Thursday, confidence level were at their strongest in two years in December. While confidence over the current economic situation has improved moderately, consumers are more buoyant about their expectations over the next one year, the survey suggested.
The consumer confidence survey goes contrary to the wide-spread believe that weakening economic conditions and a shortage of employment opportunities has depressed Indian consumers and could lead to a fall in consumer spending.
The survey shows an improvement in the view on employment conditions.
Though the net response remains pessimistic with concerns over employment, it is now less pessimistic than in the last two rounds of surveys. Consumers expect concerns over unemployment to abate one year ahead, the survey showed.
Inflation Expectations Ease
The improvement in consumer confidence goes along with a fall in inflation expectations of households.
The median inflation expectations in December 2018, dropped by 80 basis points and 130 basis points for three months ahead and one year ahead respectively, compared to November 2018.
Indian consumers do not expect general prices to rise over the short term, shows a survey conducted by the Reserve Bank of India in December 2018. Respondents moderated their expectations especially on account of food and non-food products.
The inflation expectations of households reflected the continued decline in food and fuel prices, stated the Monetary Policy Committee, while paring the repo rate by 25 basis points to 6.25 percent in its sixth bi-monthly meeting on Thursday.
