4 min readMumbaiFeb 7, 2026 05:06 AM IST
Urban consumer confidence weakened marginally in the latest survey conducted by the Reserve Bank of India (RBI), reflecting growing caution among households about economic conditions in the coming year. While sentiment on the current situation remained broadly stable, expectations for the future showed a noticeable softening.
According to the survey, consumer confidence for the current period edged lower, with the Current Situation Index (CSI) standing at 98.1 compared with 98.4 in the previous round. Although the change was marginal, it marked a reversal after three consecutive rounds of improvement in households’ assessment of prevailing economic conditions. The decline suggests a slight deterioration in perceptions of the overall economic environment.
Sentiment regarding the outlook for the year ahead also weakened, primarily due to lower expectations on general economic conditions, income prospects and price levels compared with the previous survey round. As a result, the Future Expectations Index (FEI) fell by 2.2 points to 123.4. Despite the decline, the index remained well within the optimistic zone, indicating that households continue to expect conditions to improve, albeit at a slower pace.
Households’ perceptions of their current earnings remained broadly unchanged, providing some stability to overall sentiment. However, expectations for income growth over the next year moderated, pointing to rising uncertainty about future earning prospects. At the same time, households’ views on prices and inflation deteriorated across both current and future horizons, underscoring persistent concerns over cost-of-living pressures.
In contrast, rural consumer confidence remained relatively resilient. The rural CSI has stayed range-bound above the neutral level over the past six survey rounds, indicating stable assessments of present economic conditions. Moreover, the one-year-ahead outlook in rural areas has shown steady improvement since the September 2024 round and continues to remain firmly in optimistic territory.
However, rural households also reported some deterioration in perceptions of prices and inflation in the latest survey round. On a net basis, more respondents indicated worsening price conditions, even as the proportion of households reporting no change in prices and inflation increased. This suggests that while inflation concerns persist, they may not be uniformly felt across rural respondents.
Reflecting these trends, households’ current inflation perception in rural areas rose by 50 basis points (bps) to 5.1% in the latest round. Their one-year-ahead inflation expectations also inched up marginally by 10 bps to 6.2%.
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Overall, the survey points to a mild softening of consumer sentiment, particularly in urban areas, driven by heightened concerns over future economic conditions and inflation, even as rural confidence and longer-term optimism remain comparatively stronger.
Meanwhile, the current median inflation perception of households edged up by 30 bps to 6.9% from the previous survey round, according to the RBI’s latest survey on households’ inflation expectations. Inflation expectations also firmed up across both forward-looking horizons, with three-month-ahead expectations rising by 30 bps to 7.9% and one-year-ahead expectations increasing more sharply by 60 bps to 8.6%.
Further, the survey showed that for both the short-term and one-year-ahead periods, a larger share of respondents now anticipate a rise in general prices and inflation. This marks a reversal of the declining trend seen in earlier rounds, indicating a renewed uptick in inflationary concerns among households.
Households also reported expectations of higher prices and inflationary pressures across all major product groups over both time horizons, suggesting that inflation concerns are becoming broader-based rather than being confined to specific categories.
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