From Pessimism to Optimism? Trends and Drivers of Urban Consumer Confidence in India

Author(s)	Dr. Musthaf
Country	India
Abstract	This study analyzes urban consumer confidence in India from May 2024 to May 2025 using Reserve Bank of India (RBI) survey data, employing panel regression, ARIMA modeling, and machine learning techniques to examine the Current Situation Index (CSI) and Future Expectations Index (FEI). Findings reveal a stark divergence between stagnant current confidence (CSI net score: -6.2) and growing future optimism (57.9% expecting improvement), driven by employment gains and inflation moderation, with a critical 6% inflation threshold triggering disproportionate FEI declines (β = -0.8). Formal employment boosts CSI (10% increase raises scores by 6.2 points), while gig work reduces confidence (r = -0.29), and cities with strong financial inclusion show greater resilience (+5.2 CSI points during shocks). The study contributes to behavioral economics by demonstrating recency bias in inflation perceptions and offers policy solutions like localized inflation anchoring and gig worker protections, providing actionable insights for India's urban economic recovery.
Keywords	Consumer confidence, inflation expectations, employment formalization, financial inclusion, urban India,
Published In	Volume 7, Issue 4, July-August 2025
Published On	2025-07-23
DOI	https://doi.org/10.36948/ijfmr.2025.v07i04.51848
Short DOI	https://doi.org/g9t2f5

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