Key Details
Taken together, the RBI’s latest household and forecaster surveys suggest that inflation concerns and weaker employment expectations are weighing on consumer confidence, creating a disconnect between household sentiment and the broader macroeconomic outlook.
Indicator | Latest Reading | What It Signals |
|---|---|---|
Urban Current Situation Index | 90.7 (down from 95.7) | Urban households are becoming more cautious about present economic conditions |
Urban Future Expectations Index | 118.7 (down from 120.2) | Confidence about future prospects has weakened |
Rural Current Situation Index | 95.2 (down from 98.0) | Rural sentiment continues to soften |
Rural Future Expectations Index | 119.3 (down from 125.1) | Rural optimism has declined sharply |
Rural One-Year Inflation Expectations | 7.2% | Households expect prices to remain elevated |
Household Inflation Expectations | 9.3% (3-month and 1-year horizon) | Inflation concerns remain widespread |
Professional GDP Forecast (FY2026–27) | 6.5% | Economists continue to expect strong growth |
Professional CPI Forecast (FY2026–27) | 4.9% | Inflation expected to remain within the RBI’s tolerance band |
Bank Credit Growth Forecast | Above 13% | Lending activity is expected to remain supportive of growth |
Summary
Household Confidence Continues to Weaken
The Reserve Bank of India has released four major forward-looking surveys covering urban consumers, rural consumers, household inflation expectations, and professional forecasters. Taken together, the results point to a growing disconnect between how households perceive economic conditions today and how experts assess India’s medium-term outlook.
The Urban Consumer Confidence Survey recorded a third consecutive decline in sentiment. The Current Situation Index (CSI) fell to 90.7, while the Future Expectations Index (FEI) dropped to 118.7, its lowest level since September 2023. Households reported weaker assessments of the economy, employment conditions, and income prospects. Concerns about inflation remained elevated, contributing to softer spending intentions, particularly for discretionary purchases.
Rural Sentiment Has Also Softened
The Rural Consumer Confidence Survey reported a similar deterioration. The Current Situation Index declined to 95.2, while the Future Expectations Index fell sharply to 119.3. Rural households reported weaker employment conditions, slower expected income growth, and reduced willingness to spend on non-essential goods and services.
Inflation concerns also intensified. Current inflation perceptions rose to 5.9 percent, while one-year-ahead expectations increased to 7.2 percent. Expectations were particularly elevated among daily wage workers and retired households, indicating greater concern among economically vulnerable groups.
Inflation Expectations Remain Elevated
The Inflation Expectations Survey of Households showed that concerns about future price increases remain widespread. Median current inflation perception rose to 7.8 percent, while median expectations for both three-month and one-year horizons increased to 9.3 percent.
More than 80 percent of respondents expect prices to rise further. Food, housing, and services emerged as the categories generating the strongest inflation concerns. Inflation expectations have also trended upward since late 2025, highlighting the importance of maintaining confidence in price stability.
Professional Forecasters Remain Optimistic
In contrast, the 100th Round of the Survey of Professional Forecasters presents a relatively stable macroeconomic outlook. Respondents expect real GDP growth of 6.5 percent in FY2026–27 and 6.9 percent in FY2027–28, supported by continued strength in consumption, investment, and credit growth.
Forecasters project CPI inflation at 4.9 percent in FY2026–27, easing further to 4.5 percent in FY2027–28. They also expect gradual improvements in India’s current account deficit, continued fiscal consolidation, and sustained bank credit growth above 13 percent.
What is Consumer Confidence?
Consumer confidence measures how households perceive current economic conditions and their expectations for the future. Higher confidence typically supports spending, investment, and borrowing decisions, while declining confidence often leads households to postpone discretionary purchases and increase precautionary savings.
Policy Relevance
Signals Emerging Pressure on Consumption-Led Growth: Weakening urban and rural confidence suggests that household spending may become more cautious, particularly in discretionary sectors that depend heavily on consumer demand.
Highlights the Importance of Inflation Management: Persistently high inflation expectations can influence wage negotiations, pricing decisions, and consumption behaviour. Maintaining credibility in inflation management remains critical for macroeconomic stability.
Draws Attention to Rural Demand Conditions: The sharp decline in rural future expectations suggests that employment and income generation will remain important priorities for sustaining rural purchasing power.
Supports a Balanced Policy Approach: While professional forecasters continue to expect strong growth, the surveys indicate that headline macroeconomic performance may not yet be fully reflected in household perceptions and lived economic experiences.
Reinforces the Need for Employment-Centred Growth: Moderating employment and income expectations across both urban and rural households highlight the importance of translating growth momentum into visible labour-market gains.
Follow the Full Data Here: RBI Forward Looking Surveys (May–June 2026 releases)