Consumer confidence has dipped to a new low as the second wave of 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. The current perception compared with one-year ago fell to a record 48.5 in May from 53.1 in March, shows the survey where 100 is the level that divides pessimism from optimism. But one year ahead of expectations compared with the current situation stands at 96.4 in May compared to 108.8 in March.
"Household spending also weakened in the latest survey round with essential spending showing signs of moderation while non-essential spending continues to contract."
The survey was conducted through telephonic interviews during April 29 to May 10 in 13 major cities: Ahmedabad, Bengaluru, Bhopal, Chennai, Delhi, Guwahati, Hyderabad, Jaipur, Kolkata, Lucknow, Mumbai, Patna and Thiruvananthapuram.
Perceptions and expectations on the general economic situation, employment scenario, overall price situation and own income and spending were obtained from 5,258 households across these cities.
"The future expectations index moved to the pessimistic territory for the second time since the onset of the pandemic," showed survey findings.
"This was driven by sharp fall in expectations on the general economic situation, employment scenario and household income over one year horizon."
The RBI has projected consumer price index (CPI) inflation at 5.1 per cent for FY21-22: 5.2 per cent in Q1, 5.4 per cent in Q2, 4.7 per cent in Q3 and 5.3 per cent in Q4 with risks broadly balanced.
On Friday, it also cut its projection for gross domestic product (GDP) growth for FY22 to 9.5 per cent from the earlier forecast of 10.5 per cent.
"The rising trajectory of international commodity prices, especially of crude, together with logistics costs, pose upside risks to the inflation outlook," it said.
Reports suggest there is a strong likelihood of food prices getting impacted because of Covid-19 infections and local lockdowns affecting the supply chain issues.