What is CCI ?
The Consumer Confidence Index is
a survey that measures how optimistic or pessimistic consumers are regarding
their expected financial situation.
It is based on the premise that if consumers are optimistic, they will
spend more and stimulate the economy but if they are pessimistic then their
spending patterns could lead to a recession.
Consumer
Confidence Survey
•Consumer
confidence in India refers to the Current Situation Index (CSI) which is part
of the Consumer Confidence Survey published by the Reserve Bank of India.
•The
survey is conducted in major cities like Bengaluru; Chennai; Hyderabad;
Kolkata; Mumbai; and New Delhi etc.
•It
covers around 5,000 responses on households’ perceptions and expectations on
the general economic
situation; the employment scenario; the overall price situation; and their own
income and spending.
•The
current
situation index measures
the change in consumer perception over an economic issue in the last one year
•While
the future
expectations index
measures what consumer thinks about the same variables, one year ahead.
FINDINGS
OF THE SURVEY
•The current situation index (CSI) touched a
historic low of 63.7 in May 2020 round of the survey, as against 85.6 in March
this year.
•The future expectations index fell below 100 to
97.9 in May 2020, from 115.2 in March.
Consumer
perception on the general economic situation, employment scenario and household
income plunged deeper into contraction zone .while expectation on general
economic situation and employment scenario for the year ahead were also
pessimistic.
Overall consumer spending remained afloat,
mostly due to relative inelasticity in essential spending consumers, however,
reported sharp cuts in discretionary spending and also do not expect much
improvement in the coming year
How
it will effect the economy ( Result of the Survey) ?
•Results
of the survey indicates further expected deceleration in consumption
expenditure since households, anticipating job losses and economic slowdown,
will reduce their spending.
•The
households inflation expectations survey released by the RBI also showed that
families expect a sharp increase in inflation in the coming months on account
of rising food prices.
•Along
with the consumer confidence survey,the
survey of professional forecasters on macroeconomic indicators conducted in May
show that real GDP is likely to contract by 1.5% in 2020-21.
- Rohit Meena
