Household outlook on discretionary spends positive after pandemic | The Financial Express

Household outlook on discretionary spends positive after pandemic

The households’ expectations on employment outlook a year from now has improved significantly, a survey showed.

Household outlook on discretionary spends positive after pandemic
The households’ expectations on employment outlook a year from now has improved significantly, the survey showed. (File/Pixabay)

The outlook of Indian households on discretionary spending has become positive for the first time since the the pandemic as inflationary expectations are also tempered.

The one-year expectation on spending on non-essential items improved to 0.6, according to the consumer confidence survey conducted by the Reserve Bank of India (RBI). However, as of November 2022, the current perception is that households are cutting back on discretionary spends. The sentiment on overall spending as of now has not changed significantly, although the  outlook for overall spends has improved marginally.

The households’ expectations on employment outlook a year from now has improved significantly, the survey showed.

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The consumer confidence survey obtains current perceptions of households and their outlook for one year on general economic situation, employment scenario, overall price situation and own income and spending across 19 major cities. The latest round of the survey was conducted covering 6,089 responses.  

The households’ perception on inflation for the current period declined by 40 basis points (bps), compared to the previous survey round, to 9.8% in November 2022. The expectation for three months also declined 40 bps and that for one year ahead declined by 20 bps, according to a separate survey conducted by the RBI.

The lowering of inflation expectations was broad based for both the three-month and one-year horizons.

“Among major products or services, more households expected higher inflation in food products and housing over one-year horizon,” according to the households’ inflation expectation survey. The results are based on responses from 6,066 urban households.

The RBI in its monetary policy on Wednesday tempered the rate of increase in the policy repo rate as the projected inflation is expected to come within the tolerance band by the fourth quarter of FY23.

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The central bank hiked rates by 35 bps, in contrast to the earlier steep increases of 50 bps on four occasions. Although the worst of inflation is behind, according to the RBI governor Shaktikanta Das, the central bank will continue to take steps to bring inflation within the tolerance limit.

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First published on: 10-12-2022 at 07:46 IST