CURRENT AFFAIRS
CURRENT AFFAIRS
Description
The Reserve Bank of India’s Urban Consumer Confidence Survey (UCCS) for May 2025 reflects a mixed yet cautiously optimistic outlook among urban residents. Conducted between May 2 and 11, the survey gathered responses from 6,090 participants spread across 19 key metropolitan cities in India. It provides valuable insights into how urban households perceive the current economy and what they expect in the near future.
About Survey
The UCCS, conducted every two months, measures public sentiment on various economic indicators, including income levels, employment, inflation, and spending patterns. This edition comes after the survey was restructured to focus solely on urban perceptions, separating it from the newly introduced Rural Consumer Confidence Survey.
Core Indicators: CSI and FEI
The survey produces two main indices:
Current Situation Index (CSI): This index reflects how households feel about the present state of the economy. In May 2025, the CSI showed a slight decline, falling to 95.4 from 95.5, staying below the neutral threshold of 100, which implies general dissatisfaction with current conditions.
Future Expectations Index (FEI): This index indicates optimism regarding the future. The FEI rose to 123.4 from 122.4, showing growing confidence among consumers in the economic outlook for the coming year, particularly regarding employment opportunities and income growth.
Perception Of Inflation
A key highlight of the May 2025 findings is the easing of inflation concerns. Households reported that current inflation levels dropped to 7.7%, while inflation expectations for the next 12 months also decreased to 9.5%. This shift points to a positive trend in consumer sentiment and could help boost demand in the urban economy.
Income And Spending Outlook
While opinions on current income and employment conditions remained largely unchanged, there is notable optimism about the future. Many expect their financial situation to improve, which is likely to influence consumer spending. Despite a slight decline in present-day spending on essential and discretionary items, expectations for future expenditure have strengthened.
Rural vs Urban Sentiment
A comparison with the Rural Consumer Confidence Survey, recently introduced by the RBI, reveals that rural respondents are somewhat more optimistic. The rural CSI held steady at 100.0, just above neutral, while the FEI reached 126.2. This rural confidence can be attributed to better-than-expected monsoon patterns and reduced food inflation.
Implications For Policymakers
The UCCS results play a key role in guiding economic strategies. The gradual improvement in urban demand, as highlighted by RBI Governor Sanjay Malhotra, indicates that monetary policies are having the desired effect, particularly in controlling inflation expectations. However, the data also reinforces the need for continued efforts in job creation and inflation management to support long-term economic stability.
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