The Reserve Bank of India released its July bi-monthly consumer confidence surveys on Wednesday, covering both urban and rural households across India. The Urban Consumer Confidence Survey (UCCS) covered 6,000+ respondents across 19 major cities, while the Rural Consumer Confidence Survey (RCCS) surveyed 8,000+ respondents in rural and semi-urban areas across all states and three Union territories. According to reports from Business Standard, both surveys were conducted between July 11 and July 20, 2026, and gauge households' assessment of current economic conditions compared with a year ago, as well as expectations for the year ahead on economy, employment, prices, income, spending and inflation. In a separate forward-looking survey, the RBI found consumer confidence in urban areas deteriorated in July, with the Current Situation Index easing to 88.3 from 90.7 in the previous round, though urban consumers remained optimistic about the year-ahead outlook. The Centre for Monitoring Indian Economy (CMIE) has updated the data for monthly frequency release prior to the Monetary Policy Committee meeting, with updated tabulations now available for current situation index and future expectations index for various indicators.
Indian households expect inflation to ease in the short term but predict higher price increases over the next year, according to the latest RBI survey. Households' median perception of current inflation remained steady at 7.8% in July, while inflation expectations for the next three months eased 10 basis points to 9.2%. However, expectations for year-ahead inflation inched up by 10 basis points to 9.4%, indicating that households anticipate prices to rise at a quicker pace over the next 12 months. The RBI noted that households' perception of current and future inflation is much higher than actual retail inflation in the country, as CPI inflation was at a 18-month high of 4.38% in June. The central bank projects inflation to rise to 4.7% in the July-September quarter and further to 5.9% in the December quarter, with CPI inflation expected to average 5% in 2026-27, driven by higher food and fuel prices.
Consumer sentiment weakened significantly in both urban and rural households as they became less positive about present economic conditions. In urban centres, the Current Situation Index (CSI) fell to 88.3 from 90.7 in May, while the Future Expectations Index (FEI) also eased to 115.3 from 118.7. However, the FEI remained above the neutral level of 100, indicating that consumers continue to expect conditions to improve over the coming year. Rural households also weakened, with the CSI moderating to 91.7 from 95.2, while the FEI declined to 113.6 from 119.3, suggesting that households viewed current conditions less favourably but remained optimistic about the year ahead. The RBI noted that consumer confidence in rural areas worsened in July, falling deeper into the pessimistic zone, with the one-year-ahead outlook deteriorating but remaining in optimistic territory. The updated CMIE data confirms these trends with current situation index and future expectations index showing consistent deterioration across both urban and rural segments.
Households across both urban and rural India reported weaker assessments of the economy and labour market conditions. In urban areas, the net response on the current general economic situation deteriorated to -23.4 in July from -16.5 in May, indicating that a larger share of respondents believed economic conditions have worsened. The employment indicator also weakened, with the net response falling to -21.9 from -14.4, indicating growing concern about job conditions. Rural households echoed similar concerns, with the net response on the current economic situation dropping to -11.9 from -2.5, while the employment indicator declined to -8.0 from -1.2. As reported by Business Standard, expectations for the coming year also moderated, with urban employment expectations slipping to 15.1 from 21.8 and rural expectations falling to 22.6 from 29.8, though both remained in positive territory. The updated CMIE data shows consistent deterioration in economic sentiment across all key indicators including general economic situation, employment scenario, and overall price situation.
Despite weaker confidence in the economy, households continued to expect incomes to improve over the next year, though optimism moderated, particularly in rural India. In urban areas, the net response on current income improved marginally to 1.9 from 0.9, indicating that slightly more respondents reported higher incomes than lower incomes compared with a year ago. However, expectations for income growth over the next year eased to 45.8 from 47.1, signalling that consumers were somewhat less confident about future earnings. In rural India, income sentiment weakened more noticeably, with the current income net response falling to -8.7 from -5.8, indicating that more households reported a decline in income than an increase. Urban consumers reported stronger current spending, with the net response rising to 77.3 from 74.0, while expectations for spending over the next year increased to 79.7 from 76.6. The trend was similar in rural India, where current spending net response increased to 77.4 from 75.4. The updated CMIE data confirms these spending trends with current spending net response showing improvement across both urban and rural segments.
