RBI’s Consumer Pulse: Pessimism Today, Optimism Tomorrow

Current Mood: A Mixed Bag

Urban families remain prudent about their current financial condition, and the Reserve Bank of India's (RBI) Urban Consumer Confidence Survey reflects a modest decline in confidence levels.

The Current Situation Index (CSI) for urban families declined modestly to 95.4 in May 2025 from 95.5 in March, reflecting ongoing worries about economic conditions.

Rural households also showed a slight fall, with their CSI dipping to 100.0 from 100.1, indicating subdued sentiment in the face of better agricultural prospects.

Inflation Perception: Easing But Still a Concern

Perception of inflation by households has eased, with the median expected inflation falling 10 basis points to 7.7 percent in May.

Short-term inflation expectations remained unchanged at 8.9 percent, while one-year-ahead expectations have eased to 9.5 percent.

Even with this moderation, food prices remain a top issue, with 55 percent of households anticipating further rises.

Future Outlook: A Silver Lining

There is increasing optimism regarding the future, with urban household Future Expectations Index (FEI) reaching a one-year high of 123.4.

Rural households are even more optimistic, with their FEI standing at 126.2, the highest ever since the survey began.

The RBI’s renaming of its Consumer Confidence Survey to Urban Consumer Confidence Survey and the introduction of a Rural Consumer Confidence Survey reflect a broader effort to gauge sentiment across demographics.

Demographic and Regional Variations

Retired individuals and those above 60 years perceive inflation more acutely than younger age groups.

City-wise variations are significant, with respondents in Kolkata, Mumbai, and Bengaluru reporting greater inflation concerns, while Bengaluru and Ahmedabad residents see less price pressures.

Survey Methodology and Broader Implications

The RBI carried out its surveys between May 2 and May 11, 2025, among 6,090 urban and 8,969 rural participants.

The research indicates that though the households are still cautious about the prevailing economic situation, they are growing optimistic about the future due to reasons like a good monsoon and softening inflationary pressures.

Sources:
Indian Express, Economic Times.