<p><strong>By Anirban Nag,</strong></p>.<p>Consumer sentiment in India stayed put near a record low in July, weighed down by lower income and higher cost of living, according to a Reserve Bank of India survey.</p>.<p>The current situation index was at 48.6 in July from 48.5 in May, showed the RBI’s consumer confidence survey that covered 5,384 households across 13 cities. A score below 100 suggests a pessimistic view in terms of economic conditions, while anything above that denotes the opposite.</p>.<p>Although the future expectations index rose to 104 from 96.4, suggesting optimism about the year-ahead prospects, it’s unlikely to result in higher consumer spending.</p>.<p>“The sentiments on overall spending remained unchanged as higher spending on essential items were offset by a drop in non-essential expenditure with consumers expecting further contraction in discretionary expenditure in the year ahead,” the RBI said.</p>.<p>The latest survey came as the RBI’s Monetary Policy Committee <a href="https://www.deccanherald.com/business/business-news/rbi-raises-inflation-forecast-but-keeps-repo-rate-unchanged-1016760.html" target="_blank">kept interest rates unchanged</a> at a record-low to support an economy still struggling to recover from the impact of pandemic curbs. With forecasters warning of a third wave, any new restrictions could spell more bad news for the country, where private consumption makes up some 60% of gross domestic product.</p>.<p>A separate survey pointed to inflation expectations getting well entrenched, adding to the challenge for policy makers who halted interest rate cuts more than a year ago because of gains in price-growth. Sticky underlying price pressures since then have kept the rate-setters from resuming the easing, with many in the market starting to price in some unwinding of the easy policy in the coming months.</p>.<p>Already, one of the MPC members, Jayanth Rama Varma, voted against the dovish monetary stance that allows policy makers to keep borrowing costs lower for longer to support a durable economic recovery.</p>.<p>Here are other findings of the inflation expectations survey, which covered 5,963 households in 18 cities:</p>.<p>1. Households’ median inflation perception for the current period remained elevated in double digits at 10.3%.</p>.<p>2. Inflation expectation for three months rose by 50 basis points to 11.3%.</p>.<p>3. Median inflation expectations for one-year ahead rose 60 basis points to 11.5%.</p>
<p><strong>By Anirban Nag,</strong></p>.<p>Consumer sentiment in India stayed put near a record low in July, weighed down by lower income and higher cost of living, according to a Reserve Bank of India survey.</p>.<p>The current situation index was at 48.6 in July from 48.5 in May, showed the RBI’s consumer confidence survey that covered 5,384 households across 13 cities. A score below 100 suggests a pessimistic view in terms of economic conditions, while anything above that denotes the opposite.</p>.<p>Although the future expectations index rose to 104 from 96.4, suggesting optimism about the year-ahead prospects, it’s unlikely to result in higher consumer spending.</p>.<p>“The sentiments on overall spending remained unchanged as higher spending on essential items were offset by a drop in non-essential expenditure with consumers expecting further contraction in discretionary expenditure in the year ahead,” the RBI said.</p>.<p>The latest survey came as the RBI’s Monetary Policy Committee <a href="https://www.deccanherald.com/business/business-news/rbi-raises-inflation-forecast-but-keeps-repo-rate-unchanged-1016760.html" target="_blank">kept interest rates unchanged</a> at a record-low to support an economy still struggling to recover from the impact of pandemic curbs. With forecasters warning of a third wave, any new restrictions could spell more bad news for the country, where private consumption makes up some 60% of gross domestic product.</p>.<p>A separate survey pointed to inflation expectations getting well entrenched, adding to the challenge for policy makers who halted interest rate cuts more than a year ago because of gains in price-growth. Sticky underlying price pressures since then have kept the rate-setters from resuming the easing, with many in the market starting to price in some unwinding of the easy policy in the coming months.</p>.<p>Already, one of the MPC members, Jayanth Rama Varma, voted against the dovish monetary stance that allows policy makers to keep borrowing costs lower for longer to support a durable economic recovery.</p>.<p>Here are other findings of the inflation expectations survey, which covered 5,963 households in 18 cities:</p>.<p>1. Households’ median inflation perception for the current period remained elevated in double digits at 10.3%.</p>.<p>2. Inflation expectation for three months rose by 50 basis points to 11.3%.</p>.<p>3. Median inflation expectations for one-year ahead rose 60 basis points to 11.5%.</p>
