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Worries over jobs, general economy pull consumer confidence to all-time low in May

The current situation index (CSI) dropped to 48.5 in May from 53.1 in March, according to a survey by the Reserve Bank of India (RBI).

By: ENS Economic Bureau | Mumbai |
June 6, 2021 6:11:17 am
The sharp rise in infections led to disruption in consumer activities. (Express Photo by Tashi Tobgyal/ Representational)

Hit by disruptions caused by the second wave of the Covid-19 pandemic across the country, consumer confidence in the current period — which has been in the negative territory since July 2019 — fell to a record low in May 2021.

The current situation index (CSI) dropped to 48.5 in May from 53.1 in March, according to a survey by the Reserve Bank of India (RBI). Consumer confidence declined as the second Covid wave intensified and states announced lockdowns. The sharp rise in infections led to disruption in consumer activities.

The survey indicated that the overall economic situation index contracted to (-) 75 in May as against (-) 63.9 in March. Employment level index too fell to (-) 74.9 in May from (-) 62.4 in March. As per the government data, India’s real GDP contracted by 7.3 per cent for 2020-21.

Consumers don’t expect a recovery in the situation as the future expectations index (FEI) moved to the pessimistic territory for the second time since the onset of the pandemic.

According to the survey, FEI declined to 96.4 in May 2021 from 108.8 in March, with signs of deterioration compared to last round. “This was driven by sharp fall in expectations on general economic situation, employment scenario and household income over one year horizon.”

“Consumer confidence for the current period weakened further. The current situation index (CSI), which has been in the negative territory since July 2019, fell to a new all-time low as consumer perceptions on general economic situation and employment scenario lowered further,” the survey added. It was conducted through telephonic interviews during April 29 to May 10, 2021 in 13 major cities.

As per another RBI survey on inflation expectations, households’ median inflation perception for the current period rose by 150 basis points from the survey’s previous round. “Median inflation expectation for both three months and one year ahead period increased by 70 basis points each in the latest survey round,” it said.

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