According to an RBI survey, adding to a spate of bleak data in an economy ravaged by the world’s biggest coronavirus epidemic.
As per the Reserve Bank of India’s consumer confidence survey, the present situation index plummeted to a record 48.5 in May from 53.1 in March, with 100 separating pessimism from optimism.
Respondents were similarly pessimistic about the coming year, with the future aspirations index falling to 96.3 from 108.7 in the previous period, according to the RBI.
“Household expenditure also declined in the most recent survey round,” as per RBI, citing consumers’ concerns about the economy and job prospects. Even essential expenditures was “showing symptoms of moderation,” while non-essential spending was continuing to decrease.
That’s poor news for a consumer-driven economy, with high-frequency indicators indicating deterioration with everything from retail trade to traffic congestion and electricity demand to rising jobless levels.
Another study indicated that inflation expectations were becoming strongly established, adding to the problem for monetary policymakers who paused interest rate hikes more than a year ago due to price-growth advances. Sticky core price pressures have deterred rate-setters from resuming the easing since then, including at their most recent meeting, which ended on Friday.
The median inflation perception for the present period increased by 151 basis points to 10.3 per cent, while the inflation anticipation for the next three months increased by 70 basis points to 10.7 per cent, according to the RBI poll conducted in March 2021. The median inflation projection for the next year has likewise remained high, at 10.8 per cent.
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