Indian households less confident about economic situation: RBI survey.

MUMBAI: Indian households are less confident of their current economic situation as people are uncertain about their immediate income, employment and spending capabilities, a Reserve Bank of India (RBI) bi-monthly survey on consumer confidence said. 

Current perceptions of households of their economic condition worsened in December 2016 with all expectations except price and level of inflation plummeting. The RBI monitored current situation index (CSI) which provides a gauge of households’ assessment of general economic conditions like employment, their own income and rpice situation declined sharply to 102.0 in December 2016 from 108.7 in November 2016. 

This RBI survey captures households perceptions compared to a year ago and their expectations a year ahead on a three point scale, namely, improved, remained the same, worsened. 4,752 respondents were surveyed in six cities Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi. 

"On a net basis, 15.4 per cent of respondents assessed that economic conditions improved relative to the position a year ago, as against 25.6 per cent in November 2016 and 19.4 per cent in September 2016. (However) respondents’ optimism on future economic conditions maintained its improving profile," RBI said. 

Households’ particularly are less confident of their income levels as their perception on that parameter plunged to 1.3 in December 2016 versus 20.1 in November 2016, "a level not seen in the recent past." Their outlook on income one year ahead also fell to 43.1 from 47.7 in November 2016. Employment expectations also dropped to a negative of 8.3 versus 6.2 in November 2016. 

However, inflation expectations both three months and one year ahead declined sharply. Only 68.1 per cent of respondents expect general level of prices to increase one year ahead compared to 86.3 per cent in November. 

The RBI surveyed 5,162 urban households across 18 cities in various employment categories. The drop in inflation expectations was the most prominent in food products and housing with 66.4 per cent of the respondents expecting prices to increase a year ahead in December 2016 from 82 per cent in November 2016. 

Similarly only 54 per cent of the respondents expect housing prices to increase a year later compared 79.6 per cent in November 2016. 

"Three months and one year ahead median inflation rates declined sharply by 90 and 180 basis points, respectively, in the December 2016 round relative to the immediately preceding round. Relative to the September 2016 round, however, the decline was much higher – by 220 and 310 basis points, respectively. This fall was observed across all occupation categories and in most cities, especially in Ahmeda ..