Coronavirus Lockdown: India’s consumer confidence plummets to record low in July

By Anirban Nag

Consumer confidence fell to a record low in India last month as citizens grew more pessimistic about their jobs, incomes and spending, a survey from the central bank showed.

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Sentiment had been steadily falling since the government imposed the world’s biggest pandemic lockdown in late March and collapsed further in July to reach 53.8, the Reserve Bank of India said in a report on Thursday. That’s well below the 100 mark, which represents the dividing line between pessimism and optimism.

“Consumer perception of the prevailing economic situation, employment scenario and own income was significantly lower than that in May,” the RBI said in the report. “Most respondents reported a reduction in discretionary spending” and didn’t expect to increase non-essential spending in the coming year as well, it said.

At the same time inflation expectations of households are rising, a separate report showed, making it difficult for the RBI to cut interest rates in coming months to spur spending. On Thursday, the six-member monetary policy committee voted unanimously to keep its main policy rate unchanged, given the recent surge in inflation to above the central bank’s 2%-6% target range.

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There was a glimmer of hope in the sentiment survey though, with consumers turning cautiously optimistic about the coming year. The survey is conducted in over 13 Indian cities and covers more than 5000 households.