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  The Reserve Bank of India (RBI) recently released the results of forward-looking surveys. Based on the feedback received from the respondents the survey results provide important insights with respect to consumer confidence, inflationary expectations and economic growth expectations. Consumer confidence The survey collects current perceptions (vis-à-vis a year ago) and one year ahead expectations of households on general economic situation, employment scenario, overall price situation, own income and spending across 19 major cities. As per the survey results, Consumer confidence for the current period paused on its uptrend as sentiments on all parameters, except spending. The current situation index (CSI)2 moderated to 97.1 in May 2024 from 98.5 two months ago. (A value below indicates a state of pessimism) However, for the year ahead, consumer confidence remained at elevated level in the optimistic terrain though it declined, albeit marginally, due to relatively tempere...

  RBI recently released the results of the latest surveys of consumer confidence, inflation expectations, and professional growth forecasts. The results generally show that consumer confidence is sustained at high levels, with respondents fairly optimistic about the prospects in the year forward period; inflationary expectations are stable and the growth momentum of FY24 is likely to be sustained in FY24 also. Some key highlights of the surveys could be noted as follows: Consumer confidence stable ·          Consumer confidence for the current period is stable; the current situation index (CSI) remained unchanged from the previous round. ·          Higher pessimism on the current general economic situation and employment was counterbalanced by a positive turnaround in sentiment on current income. ·          Respondents were fairly optimistic about the ye...

High vegetable, grocery, and energy prices have disrupted the budget of most Indian households. Besides, unaffordable housing costs (rentals & EMI) and education & healthcare costs have impacted many middle-class households. An analysis of 1QFY24 results of the consumer companies indicates that there was nothing particularly noteworthy in the overall performance of the consumer companies. Demand environment for both staples and durable consumer goods remained subdued; though some companies reported decent growth in margins primarily due to lower costs. The current quarter (2QFY24) has witnessed disruptions due to challenging weather conditions. The southwest monsoon has been erratic both temporally and spatially. To date only about 43% of districts have received normal rainfall; whereas 40% of districts are deficient and 17% have received excess or large excess rainfall. Northern states have witnessed significant disruptions due to excess rains; impacting the logistics and cr...

For the past two years, I have been highlighting to the readers of this blog that almost two third of the Indian population is experiencing conditions that qualify to be termed stagflationary. Their incomes have been stagnant or declining in many cases, while their cost of living has risen materially. The expenses on the critical services like education, healthcare, telecom, transportation and essential goods like food, energy, housing etc. have increased materially in the past 2 years. Besides, the proportion of aspirational (non-essential) spending in the overall consumption basket has also been increasing consistently. On the other hand, the household incomes have not kept pace with the rise in the cost of living. Wages for unskilled and semi-skilled labor have hardly changed. The employment opportunities for them have also diminished. The women participation in the labor force has reduced, pressuring the average household income. The wages for the highly skilled workers have seen...

  As per the latest survey conducted by RBI, the Consumer Confidence in India remained at an all-time low level in September with the general economic situation worsening during the month. This data read with the dismal IIP growth (-8%) and elevated consumer inflation (7.34% highest since January 2020) indicates that (i) the recovery from lockdown is slower and belies the enthusiasm shown by some of the analysts and economists; and (ii) we shall struggle to reach the pre lockdown level of economic activity for at least 2 more quarters and any improvement in the growth trajectory normalized for lockdown impact may still be far away. Remember, the economic growth in India was declining much before the pandemic forced a complete lockdown in March 2020. The key highlights of the Consumer Confidence Survey (September 2020) are as follows: ·          As per the survey, the consumer confidence (current situation) continued to slip for third succ...

Two data points released on Wednesday has again brought the specter of stagflation in India to the fore. The rise in food prices and telecom tariffs pushed the retail inflation in January 2020 to 7.59%, the highest level seen since May 2014. At the same time the industrial production recorded a decline of 0.3% in December 2019. I agree with the viewpoint that at macro level we may not be facing any threat of stagflation in near term. I also believe that (a) the headline CPI number may be close to peaking and may ease considerably post summer, as estimated by the monetary policy committee (MPC) of RBI; and (b) the headline growth number may be close to bottom and we may see a gradual recovery from 2HFY21 onwards. Notwithstanding the macro viewpoint, it is pertinent to keep in mind that a large segment of the population may already be experiencing stagflationary conditions. There is no denying that the employment conditions have worsened in past one decade a...