In July last year, consumer confidence had weakened to hit an all-time low as perceptions on general economic situation and employment had weakened.
The current situation index (CSI) rose by 1.4 points from 75.9 in May to 77.3 in July. This was mainly on account of improved perception on employment, household income and spending, the survey said.
However, future expectations index (FEI) recorded only marginal improvement from 113 in May to 113.3 in July as consumers expressed optimism on the outlook for economic situation and overall spending over the next 1 year.
An index value below 100 represents pessimism, while above 100 signal optimism.
“Consumers’ perception of prevailing price level as well as inflation declined from that in the previous round of the survey; they expect further rise in prices, but inflation is expected to moderate marginally over the next one year,” the survey added.
Majority of the households reported a rise in their current spending and anticipated that the trend would continue for the year ahead.
The consumer confidence survey seeks qualitative responses from households regarding their sentiments on general economic situation, employment scenario, price level, households’ income and spending.
Meanwhile, capacity utilization in the manufacturing sector rose to 75.3% in the March quarter from 72.4% in the December quarter, improving for the third straight quarter, RBI’s survey showed.
It is conducted regularly in 13 major cities — Ahmedabad, Bengaluru, Bhopal, Chennai, Delhi, Guwahati, Hyderabad, Jaipur, Kolkata, Lucknow, Mumbai, Patna and Thiruvananthapuram. It covers about 5,387 households across these cities.
Earlier in the day, RBI hiked repo rate for 3rd time in a row by 50 bps to 5.4%. It is 25 bps higher than the pre-pandemic repo level.
In a separate report released by RBI, households expected inflation to moderate.
Current inflation expectations dropped by 80 basis points to 9.3% in July, according to the median in the RBI survey of 5,935 urban households. The three-month and one-year ahead expectations also declined by 50 and 60 basis points, respectively.