RBI Releases Key Inflation, Consumer Confidence Surveys for 2021

The Reserve Bank of India regularly conducts Consumer Confidence Survey (CCS) and Inflation Expectations Survey of Households (IESH). On 27 June 2021, it released the July 2021 round of these surveys.

What are CCS and IESH?

CCS seeks qualitative feedback from respondents on their sentiments on households’ income and spending situation, price level, employment opportunities, and the overall economic situation of India. On the other hand, IESH aims to capture the subjective assessments of inflation and price movements premised upon individual consumption baskets of Indian households.

CSS and IESH survey reports

Consumer Confidence Survey’s July 2021 round finds that the current situation index or CSI, which has been in negative territory since July 2019, dropped to an all-time low. Consumer perceptions regarding employment and economic situation have dipped further. As a result, consumer confidence for this period is on the low.

Furthermore, the future expectations index or FEI also went down a pessimistic territory. In fact, this happened for the second time since the onset of Covid-19. This fall has also been a driving force in the decline of expectations on the overall household income for a 1-year horizon, employment scenario of the country, and the general economic situation.

According to this survey, household spending has also weakened. However, as non-essential spending continues to contract, essential spending shows signs of moderation.

The table below summaries the current perception compared to expectations of Indian households for the year ahead:

As for inflation expectations, IESH found that the median inflation perception of households for the current period has increased. In fact, it went up by 150 basis points from this survey’s preceding round.

Moreover, the median inflation expectation for a period of 3 months as well as 1-year rose by 70 basis points. This increase indicates that nearly 60% of the respondents expect higher general inflation for the next 3 months and over a period of 1 year.

Who conducts these surveys and why?

M/s Hansa Research Group Pvt. Ltd., a Mumbai-based research agency, conducted these surveys on behalf of the RBI. Consumer Confidence Survey covered 13 cities, viz., Thiruvananthapuram, Patna, Mumbai, Lucknow, Kolkata, Jaipur, Hyderabad, Guwahati, Delhi, Chennai, Bhopal, Bengaluru, and Ahmedabad.

On the other hand, the Inflation Expectations Survey of Households took place across 18 cities, namely Thiruvananthapuram, Ranchi, Raipur, Patna, Nagpur, Mumbai, Lucknow, Kolkata, Jaipur, Hyderabad, Guwahati, Delhi, Chennai, Chandigarh, Bhubaneshwar, Bhopal, Bengaluru, and Ahmedabad.

Over 5,000 households across the above-mentioned cities participated in these surveys for July 2021 and offered their feedback. Moreover, RBI encouraged other individuals who could not be approached by the agency to provide their responses digitally. Results of these surveys offer valuable inputs for monetary policies in India.

Summing up

Consumer Confidence Survey (CSS) and Inflation Expectations Survey of Households (IESH) for July 2021 reveal that consumer confidence is plummeting as the pandemic disrupts India’s economy. Moreover, a majority of Indian households expect inflation to continue its climb in the months to come.

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