Consumer confidence edged up in January 2022, but remained in the pessimistic zone, according to the Reserve Bank of India's (RBI) latest survey.
As per the survey, released on February 10, the Current Situation Index rose to 63.7 in January 2022 from 62.3 in November 2021. Meanwhile, the Future Expectations Index declined to 103.0 from 109.6.
A reading of more than 100 is suggestive of optimism, while one below 100 indicates pessimism.
According to the RBI, the fall in the Future Expectations Index was because the survey coincided with a huge jump in COVID-19 cases.
The Consumer Confidence Survey was conducted in 13 major cities during January 2-11 and covered 5,387 households.
While the Consumer Confidence Survey offered mixed clues, there was better news on the inflation front.
As per the Households' Inflation Expectations Survey, median inflation perceptions for the current period declined by 70 basis points from November 2021 to 9.7 percent in January 2022.
RBI Monetary Policy Highlights
Inflation expectations for the three-month and one-year ahead periods displayed even larger falls. As per the latest survey, three-months-ahead inflation expectations slumped to 10.6 percent from 12.3 percent in November 2021. Meanwhile, one-year-ahead inflation expectations crashed to 10.7 percent from 12.6 percent.
The inflation expectations survey provides directional information on near-term inflationary pressures. The RBI does not treat them as households' sentiments on inflation.
The huge fall in inflation expectations will be a source of relief to the central bank. In its latest meeting, the Monetary Policy Committee (MPC) left the repo rate unchanged at 4.00 percent, with the RBI forecasting that inflation will moderate to 4.5 percent in FY23 from 5.3 percent in FY22.
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