It is an economic indicator that measures the degree of optimism or pessimism that consumers feel about overall state of the economy and personal financial situation.
- It serves as an indicator of the health of the economy from the perspective of the consumer.
- High consumer confidence in the economy is usually related to higher spending by Consumers.
It is measured through a bi-monthly Consumer Confidence Survey (CCS) conducted by the Reserve Bank of India (RBI).
Survey obtains current perceptions (vis-à-vis a year ago) and one year ahead expectations on general economic situation and own income and spending across 19 major cities.
- Survey obtains information on urban consumer sentiments and captures qualitative responses to questions pertaining to general economic conditions.
CCS responses are measured through two indexes:
- Current Situation Index (CSI) - Consumer sentiment about current economic, employment, and price conditions as compared to a year ago.
- Future Expectation Index (FEI) - Expectations about economic, employment, and price conditions a year ahead.
  - Businesses often use it to make better-informed decisions or adjustments in strategy such as investments in new projects or launch of new products.

Findings of the latest Consumer Confidence survey

Consumer confidence improved both for the current period as well as for the year ahead.
Current situation index (CSI) continued on its recovery path since the historic low recorded in mid-2021.
- It increased on the back of improved sentiments on general economic situation and household income.
Future expectations index (FEI): Rose to its two-year high on the back of improved optimism on general economic situation, employment and income over the next one year.

Conclusion

Consumer confidence does give a meaningful clue as to the economy's strength, both in the present and the future. There is a need for further consideration for joining it with other forecasting information for better future economic predictions.