Chennai: After a sharp upsurge in the March, consumer confidence fell in May, as per the Consumer Confidence Survey by the RBI. A deterioration in sentiments on the economic situation and employment have led to the weakening of consumer confidence.
Two key indicatiors of confidence — Current Situation Index (CSI) and Future Expectations Index (FEI) returned to pessimistic territory. CSI, which had entered optimistic territory after a gap of two years in March 2019, returned to pessimism. FEI slipped from its all-time high in March 2019.
The key variables to understand the current perception and the future expectation are households' perception on the economic situation, employment, price level, income and spending. All the positive sentiments as well as negative sentiments showed signs of deterioration compared to the last survey in March.
Consumers' perception of the general economic situation remained in optimistic territory despite a sharp lowering of sentiments in the current round; while the one-year ahead outlook also turned out to be less optimistic. Sentiments on the current employment scenario returned to pessimistic territory and there was lowering of optimism in the future outlook. Respondents perceived a rise in price level over the last one year and they expect further deterioration in the price situation for the year ahead.
Half the respondents continued to report stagnant income over the last one year, but a majority still expects their incomes to rise in the coming year. Despite a marginal increase in spending on essential items, a sharp fall in the discretionary spending led to lower overall spending by households and a somewhat less optimistic outlook for the year ahead.
