Inflation expectations showed signs of easing, even as consumer confidence gradually returns, according to the Reserve Bank of India's forward-looking survey.
Households' inflation perceptions for the current period declined by 40 basis points, from the previous survey round, to 9.8% in November 2022, according to the Inflation Expectations Survey of Households.
The expectations for three months and one-year ahead also reduced by 40 bps and 20 bps to 10.4% and 10.8%, respectively.
Lowering of inflation expectations was broad-based across respondent categories for both three months and one-year horizon. The current survey round witnessed a decline in variation among respondents' inflation expectations, especially for one-year ahead.
Among major products/services, more households expected higher inflation in food products and housing over the one-year horizon.
Consumer Confidence Picks Up
Consumer confidence for the current period has continued to recover after the second wave of Covid-19, though it remained in the pessimistic zone.
The current situation index improved further to 83.5 in November compared to 80.6 in September, on account of better perceptions of general economic situation, employment and household income.
The one-year ahead outlook, as measured by the future expectations index, also improved to 114.9 in November from 113 in September, after remaining steady in the previous three survey rounds.
The survey obtains current perceptions and one-year ahead expectations on general economic situation, employment scenario, overall price situation, and own income and spending across 19 major cities.
Households displayed lower pessimism on the prevailing employment conditions vis-à-vis the previous survey round, while they were more optimistic on employment outlook.
The outlook on discretionary spending moved to positive terrain for the first time since the onset of the pandemic.
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