Consumer confidence collapsed to historic low in May, says RBI survey

As the coronavirus pandemic continues to trouble India's economy, the consumer confidence has collapsed to a historic low, a survey by the Reserve Bank of India has showed.

"Consumer confidence collapsed in May 2020, with the Current Situation Index (CSI) touching historic low and the one year ahead Future Expectations Index (FEI) also recording a sharp fall, entering the zone of pessimism," said RBI's Consumer Confidence Survey (CCS).

The survey added that consumer perception on the general economic situation, employment scenario and household income plunged deeper into contraction zone, while expectations on general economic situation and employment scenario for the year ahead were also pessimistic.

"Overall consumer spending remained afloat, mostly due to relative inelasticity in essential spending ; consumers, however, reported sharp cuts in discretionary spending and also do not expect much improvement in the coming year," it said.

In view of the COVID-19 pandemic, the survey was conducted through telephonic interviews during May 5-17, 2020 in thirteen major cities, viz., Ahmedabad; Bengaluru; Bhopal; Chennai; Delhi; Guwahati; Hyderabad; Jaipur; Kolkata; Lucknow; Mumbai; Patna; and Thiruvananthapuram.

In another survey conducted by the central bank on 'Households' Inflation Expectations Survey', it was found that households' median inflation perception and expectations increased sharply in May 2020 as compared to the March 2020 round of the survey.

Participants were expecting increasing price pressure on food products, the survey said, adding that more households expect general prices and inflation to rise over a three-month horizon as compared to the previous round.

The survey consisted of 5,761 urban households as participants.