Why is it in the News?

Consumer confidence for the year ahead has improved further on the back of higher optimism, which resulted in the Future Expectations Index (FEI) rising by 2.1 points to 125.2, the highest level since mid-2019, according to a Reserve Bank of India survey conducted in March 2024.

What is the Consumer Confidence Survey (CCS)?

• The Consumer Confidence Survey (CCS) is a comprehensive assessment conducted by the Reserve Bank of India (RBI) to gauge consumer perceptions of the current economic landscape.
  • Administered across various cities, the CCS measures consumer confidence based on key indicators such as economic conditions, employment prospects, price levels, income, and spending patterns.
• The survey collects valuable insights into consumer sentiments by posing a series of questions about both present and future economic scenarios.
  • These responses offer a glimpse into consumers' perceptions of the prevailing financial environment, shedding light on economic trends, opportunities, and potential challenges.
• As a vital tool for policymakers, the Consumer Confidence Survey contributes to shaping effective strategies aimed at fostering sustainable economic growth and improving overall financial stability.

Highlights of the Survey:

• The survey revealed optimistic consumer sentiments across all parameters, reflecting a positive outlook on the current and future economic landscape.
  • Key indicators, such as the Current Situation Index (CSI) and Future Expectations Index (FEI), showcased significant improvements, reaching their highest levels since mid-2019.
• Current Situation Index (CSI): Measuring overall consumer perception of the present economic situation, the CSI experienced a notable increase of 3.4 points compared to the previous survey, currently standing at 98.5.
• Future Expectations Index (FEI): Evaluating consumer sentiment for the next 12 months, the FEI witnessed a substantial surge, reaching its highest point since mid-2019 and indicating a positive outlook for the upcoming year.
  • The CSI and FEI are calculated based on net responses concerning the economic situation, income, spending, employment, and price levels, comparing the current period with one year ago and the anticipated changes in the year ahead, respectively.
• Households’ Inflation Expectation Survey: There was a slight increase in the proportion of households anticipating an overall rise in prices and inflation within the next three months and one year, as observed across general prices and most product categories when compared to the previous survey round.
• Additionally, the survey results revealed noteworthy enhancements in households' perceptions regarding the general economic situation and employment prospects, signaling a sense of optimism for both the current period and the years ahead.