The Reserve Bank of India’s forward-looking surveys point to recovery in consumer sentiments, moderation in household inflation expectations, but lower optimism by infra and services sectors. 

“Consumer confidence for the current period reverted to its recovery path after a brief pause in July round of the survey; the current situation index (CSI) reached a four-year high on the back of respondents’ better assessment of current general economic situation and employment conditions in September,” RBI said in its bi-monthly consumer confidence survey. 

General economic outlook as well as the prospects for employment, income and spending are expected to improve further over the next one year; the future expectations index also reached a four-year high in the latest survey round. 

Households’ perception of current inflation moderated by 50 basis points (bps) since July 2023 round of the survey to 8.4 per cent in September 2023. Households expect lower price and inflationary pressures for most of the product groups.. Inflation expectations of all major group of respondents, except the self-employed category, have moderated. 

When it comes to the services industry, respondents remain optimistic about overall business situation, turnover, and employment conditions in Q324, though their optimism was lower vis-à-vis the previous quarter. Pressures from wage bill, input cost and cost of finance are likely to ease but service firms are less optimistic for selling price and profit margin in the third quarter of 2023-24.

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“Overall business situation is expected to improve further till Q125 with positive sentiments on turnover and employment,” RBI said in Services and Infrastructure Outlook Survey.

Industrial outlook

Infrastructure companies remained positive on overall business situation as well as their turnover, though their assessment was a shade lower when compared to the previous round of the survey. However, manufacturing companies reported higher optimism on demand conditions during the second quarter of 2023-24.

“Manufacturers expressed higher optimism for the third quarter, as reflected in their improved expectations on production, order books, capacity utilisation and overall business situation,” RBI said in the latest Industrial Outlook Survey of the Manufacturing Sector 

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