Indian consumers are facing double whammy with their confidence in May touching historic low of 63.7 per cent from 85.6 per cent in March, along with expectations of retail inflation accelerating in the next three months, as per the survey released by the Reserve Bank of India (RBI) late Thursday.
The central bank said, "Consumer confidence collapsed in May 2020, with the current situation index (CSI) touching historic low and the one year ahead future expectations index (FEI) also recording a sharp fall, entering the zone of pessimism."
"Consumer perception on the general economic situation, employment scenario and household income plunged deeper into contraction zone, while expectation on general economic situation and employment scenario for the year ahead were also pessimistic."
Along with lower confidence, the survey conducted among 5,761 households across 18 major cities of the country showed that 85.3 per cent households expect inflation to accelerate in the next three months, compared with 83.3 per cent in March, reports Xinhua.
"Three-month and one-year ahead median inflation expectations rose by 190 and 120 basis points, respectively, over the previous round," said the RBI survey.
Central Bank of Asia's third largest economy had revised the retail inflation, calculated on the basis of consumer price index (CPI) to 5.84 per cent in March, which was above its medium term of goal of 4.0 per cent for the sixth month in a row.
India has been under the two-month nation-wide lockdown due to COVID-19, which was extended to June 30 in containment areas with phase-wise easing of restrictions.
The pandemic has already battered the slowing Indian economy with unemployment rate see at 23.5 percent in the month of May, as per Centre for Monitoring Indian Economy, an independent think-tank body.
Last month, the Indian government had offered a stimulus package of 264 billion US dollar and RBI had cut policy rates by cumulative 115 basis points since the pandemic broke out to revive the economic growth.