India’s consumer confidence was at a six-year low— and it just dipped further

• The Consumer confidence index — that measures the economic situation, income and employment — dipped to a new low of 83.7 in January.
  
• The index, which reflects the mood of the consumers, has been declining for xx months in a row.
  
• This coincides with the unemployment rate, which hit 7.1% in January, according to the Centre for Monitoring Indian Economy (CMIE).
  

The Indian economy has been slowing down, and that has affected the salaries and jobs in the market. Adding fuel to fire, inflation has been on the rise. As a result, Indian households are losing confidence.

The consumer confidence index — that measures the economic situation, income and employment from over 5,300 households across 13 cities — dipped to a new low of 83.7 in January. And why not, the rising prices are pinching pockets without any hope of gainful employment or better salaries.

The Reserve Bank of India (RBI) survey showed that the consumer sentiment was at a six-year low in September. But that was not the lowest. The index has shown further declines in the following months. “Current perception on the general economic situation, price levels and household income remained weak when compared with the position a year ago; the one year ahead expectations on employment, however, improved marginally,” the report said.

Retail inflation spiked hitting 7.3% in December 2019, the highest in over five years. And the threat of further spike in prices of essential items of daily use is still looming large. “First, food inflation is likely to soften from the high levels of December and the decline is expected to become more pronounced during Q4:2019-20 as onion prices fall rapidly in response to arrivals of late kharif and rabi harvests. Higher vegetables production, despite the early loss due to unseasonal rain, is also likely to have a salutary impact on food inflation, the policy document said.

This coincided with the unemployment rate, which was recorded at 7.1% in January 2020, according to data from the Centre for Monitoring Indian Economy (CMIE).

The more money people have to spend on things that they need for survival, the less they spend on discretionary items like homes and cars. “Most households perceived prices and spending having increased during the past one year and expect further rise in expenditure over the next one year; but households reported lower spending on non-essential items as compared to one year ago,” the latest survey said.

And this very squeeze is at the heart of India’s ongoing economic slump, the lack of consumer demand.

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