Context:.
Consumer confidence in India is at its highest level since mid-2019, according to a recent Reserve Bank of India (RBI) survey.
More on the news:
- The survey included over 6,000 respondents, with females making up 50.8 percent of the sample.
- Current Situation Index (CSI) increased by 3.4 points to 98.5, indicating improved perceptions across all survey parameters.
- Future Expectations Index (FEI) rose to 125.2, its highest level since mid-2019, reflecting heightened optimism for the upcoming 12 months.
- This suggests that Indian households are feeling more optimistic about the economy, potentially leading to increased spending.
- There are also bright prospects for investment activity, due to factors like a rise in manufacturing capacity utilization.
- The RBI decided to maintain the Repo Rate unchanged at 6.5 percent in its recent meeting.
About Consumer Confidence Survey (CCS)
- It is a tool used to gauge consumer sentiment about the current and future state of the economy. It’s typically conducted by a government agency or research institution.
- It seeks qualitative responses from households, regarding their sentiments on general economic situation, employment scenario, price level, households’ income and spending. It is conducted regularly in 19 cities.
- Purpose: Measures consumer’s feelings about the economy, impacting their spending habits and overall economic activity.
- Conducted by: In India, the Reserve Bank of India (RBI) conducts the CCS.
Methodology: Surveys households, gathering their perceptions (compared to a previous period) and expectations (for the future) on various factors like:
- General economic situation
- Employment scenario
- Overall price situation
- Own income and spending
- Analysis of CCS results:
Consumer Confidence Surveys (CCS) use two key indexes:
- Current Situation Index (CSI): Measures consumer perception of the current economic situation compared to a past period (e.g., 6 months). A score above 100 indicates optimism, below 100 suggests pessimism.
- Future Expectations Index (FEI): Gauges consumer outlook for the next year (typically). Similar calculation to CSI, but focused on future expectations. A high FEI suggests optimism about the coming year, a low FEI indicates pessimism.
Significance:
- Policymakers: Use CCS data to make informed decisions about economic policies like interest rates and government spending.
- Businesses: Use CCS data to understand consumer behavior and adjust their strategies accordingly (e.g., production levels, marketing campaigns).