Consumer Confidence and Inflation Expectations Reflect Mixed Sentiments: RBI Surveys
The Reserve Bank of India’s (RBI) latest bi-monthly Consumer Confidence Survey (CCS) and Inflation Expectations Survey of Households (IESH), both conducted in January 2025, paint a nuanced picture of household sentiments across 19 major cities. The CCS covered 6,081 respondents—with female participants accounting for 52.4%—while the IESH included 6,096 valid responses with 55.4% female participation. These surveys capture current perceptions, one-year-ahead expectations on key economic parameters, and inflation outlooks.
The Current Situation Index (CSI) registered a marginal decline of 0.3 points, slipping to 93.7 in January 2025. This slight dip reflects tempered sentiments across most survey parameters, excluding price levels. The decline suggests that households are feeling the pinch of subdued economic activity, possibly influenced by factors such as fluctuating employment prospects and stagnating income growth.
Despite the cautious current sentiment, the Future Expectations Index (FEI) remained firmly in optimistic territory at 120.7. However, this marks a decline of 1.2 points from the previous survey round, indicating that while households are hopeful about economic recovery, their optimism has moderated. This softening could be attributed to uncertainties surrounding global economic conditions, inflationary pressures, and domestic policy shifts.
A notable highlight from the CCS is the reduction in pessimism regarding current price levels and inflation compared to the November 2024 round. This suggests that households are perceiving some stability in price movements, likely due to recent monetary policy measures aimed at controlling inflation. However, looking ahead, respondents expect both prices and inflation to inch up, signaling persistent concerns about cost-of-living increases in the near future.
In line with this, the IESH revealed that households’ median inflation perception moderated marginally by 10 basis points to 8.3%. However, inflation expectations for the three-month and one-year horizons rose to 9.3% and 10.2%, respectively. The share of households anticipating a rise in general prices and inflation has increased, especially concerning food products and housing.
The CCS also revealed subdued sentiments on both essential and non-essential spending compared to the previous round. This cautious approach to expenditure reflects households’ hesitancy in the face of economic uncertainty. Nonetheless, despite some moderation, future spending sentiments remain strong, indicating a potential rebound in consumer demand if economic conditions stabilize.
The January 2025 CCS and IESH underscore a complex consumer landscape: while current sentiments are slightly dampened, there is cautious optimism for the future. The decline in pessimism around price levels is a positive sign, yet concerns about future inflation and moderated expectations suggest that both policymakers and businesses should remain vigilant. As India navigates through economic uncertainties, understanding these shifting consumer sentiments and inflation expectations will be crucial for sustaining growth and stability.