Consumer confidence up, inflation easing slowly, RBI surveys show

“Inflation expectations have reverted to single-digits for the first time since the onset of the Covid-19 pandemic,” the survey said

The latest consumer surveys conducted by the Reserve Bank of India (RBI) for September showed improvement in consumer confidence alongside moderation in inflation expectations.

Consumer confidence for September 2023, compared to a year ago, reverted to its recovery path after a brief pause in the July 2023 round of the survey, according to the latest survey.

“The current situation index (CSI), reached a four-year high on the
back of respondents' better assessment of the current general economic situation and employment conditions in September 2023,” it showed.

Also read: RBI MPC: Monitoring certain components of personal loans in the books of banks, NBFCs, says Guv Das

Similarly, households’ median inflation perception for the current period moderated by 50 basis points (bps) since the July 2023 round of the survey to 8.4 per cent in September 2023, the survey found. The RBI has been trying to contain high inflation expectations through its policy measures.

Also, inflation expectations for both three-month and one-year ahead periods moderated by 90 bps and 40 bps from July 2023 level to 9.1 percent and 9.9 percent, respectively.

“Inflation expectations have reverted to single-digits for the first time since the onset of the Covid-19 pandemic,” the September survey found.

The RBI conducted the inflation expectation survey during September 2-11 across 19 major cities with responses from 6,066 urban households. Female respondents accounted for 50.4 percent of this sample. The consumer survey was conducted during the same period and covered 6,077 respondents. Female respondents accounted for 50.3 percent of this sample.

As expected, the RBI’s Monetary Policy Committee (MPC) left the repo rate, the rate at which the central bank lends short-term funds to banks, unchanged at 6.5 percent on October 6.

"MPC voted unanimously to leave the repo rate unchanged at 6.5 percent," Das said while announcing MPC's decision.

The overall tone of the bi-monthly monetary policy remained tilted towards the inflation fight. In the October MPC decision, Das said that the CPI inflation forecast for 2023-24 was left unchanged at 5.4 percent.

Das also mentioned that throughout the third quarter, food inflation pressure may not see sustained easing, while core CPI eased 140 basis points from its earlier peak in January.

Also read: RBI makes no change to FY24 inflation forecast, implies sub-5% CPI in September

The retail inflation fell to 6.83 percent in August as vegetable prices cooled compared to the previous month but it was still above the RBI's tolerance band of 2-6 percent.

At 6.83 percent, the Consumer Price Index (CPI) inflation print was 61 basis points lower than July's 15-month high of 7.44 percent. It was also the 47th month in a row that it stayed above the central bank's medium-term target of 4 percent.