Urban consumer confidence weakened for the third consecutive survey round in May 2026, reflecting growing caution among households over the economic situation and spending patterns, according to the latest Urban Consumer Confidence Survey (UCCS) released by the Reserve Bank of India (RBI).
The survey, conducted between May 2 and May 11 across 19 major cities and covering 6,086 respondents, showed a decline in both current perceptions and future expectations.
Current confidence deteriorates
The Current Situation Index (CSI), which captures households’ assessment of prevailing economic conditions compared with a year ago, fell to 90.7 in May from 95.7 in the previous round.
The decline marks the third consecutive drop in urban consumer confidence, indicating increased pessimism about current economic conditions.
Households reported a weaker assessment of the overall economic environment, employment prospects, prices, income and spending compared with a year earlier.
Future outlook remains positive, but weakens
While consumers continued to remain optimistic about the year ahead, confidence levels softened further. The Future Expectations Index (FEI) declined by 1.5 points to 118.7, the lowest reading since September 2023.
The index nevertheless remained above the neutral level of 100, suggesting that households still expect conditions to improve over the coming year, albeit at a slower pace than previously anticipated.
Economic sentiment softens
The survey revealed a notable deterioration in households’ perception of the general economic situation. Current perceptions regarding the economy declined by 7.9 points from the previous round, highlighting growing concerns over economic conditions.
Expectations for the year ahead also weakened, with the outlook index falling by 3.6 points. However, the indicator remained in optimistic territory, suggesting consumers continue to expect economic conditions to improve over the medium term.
Spending sentiment weakens sharply
One of the key findings of the survey was a significant decline in households’ sentiment on spending.
Consumer confidence regarding expenditure weakened for both the current period and the year-ahead horizon, reflecting greater caution in household consumption decisions.
According to the RBI survey, the moderation was largely driven by softer sentiment toward discretionary spending, indicating that households may be postponing or reducing non-essential purchases amid prevailing economic uncertainties.
The trend could have implications for consumption-led growth, as discretionary spending typically supports demand across sectors such as consumer durables, travel, hospitality and retail.
Signal for consumer demand
The survey suggests urban consumers are becoming more cautious despite retaining a broadly positive outlook for the future.
The decline in both current and future confidence indicators points to concerns around economic conditions and spending capacity, even as expectations remain above neutral levels.
Analysts will closely track future survey rounds to assess whether the moderation in confidence translates into softer consumer demand or remains a temporary adjustment in sentiment.
The Urban Consumer Confidence Survey serves as an important indicator of household perceptions regarding the economy, employment, prices, income and spending trends, offering insights into the consumption outlook for the broader economy.