As the second wave of the Covid-19 pandemic continues to take a toll on lives and businesses across the country, a new survey by the Reserve Bank of India [RBI] shows that the Consumer confidence has dipped to a new low.
The current situation index fell to a record low of 48.5 in May 2021 from 53.1 in March, which shows the survey where 100 is the level that divides pessimism from optimism.
This survey was conducted through telephonic interviews from April 29 to May 10 in 13 major cities of India: Ahmedabad, Bengaluru, Chennai, Delhi, Guwahati, Hyderabad, Jaipur, Kolkata, Lucknow, Mumbai, Patna and Thiruvananthapuram.
The survey showed that the household spending weakened as compared to in the last survey round with essential spending showing signs of moderation while the non-essentials spending continues to contract.
One year ahead of expectations compared with the current situation stands 96.4 in May compared to 108.8 in March. That’s bad for an economy primarily driven by consumption, with high-frequency indicators progressively showing weakness in everything from retail activity to road congestion and power demand to the main rising unemployment levels.
The RBI projected the Consumer Price Index [CPI] inflation at 5.1 percent for FY21-22. The rising trajectory of international commodities prices, especially of crude, together with logistic costs, pose upside risks to the inflation outlook, the report said.
The Consumer Price Index [CPI] inflation would be at 5.1 percent for FY21-22: i.e. 5.2% in Q1, 5.4% in Q2, 4.7% in Q3, and 5.3% in Q4 with risks broadly. The reports also suggest that there is a strong likelihood of food prices getting impacted because of Covid-29 infections and local lockdowns affecting the supply chain.