Business & Economy
RBI finds urban pessimism rising as interest rates move higher
Households feel poorer despite stronger official growth forecasts
Households feel poorer despite stronger official growth forecasts
Urban households are becoming more worried even as India’s economy looks stronger in official figures. In the ’s September survey of 6,054 people in 19 cities, 54.5% said conditions had worsened. That was up from 50.5% in July and 40.9% a year earlier. Worries about jobs, prices, income and spending show that growth is not making many families feel safer.
The raised its by 0.25 percentage points to 5.5% and signalled more increases after lifting its to 5.2%. Higher rates may reduce spending, housing demand and new borrowing, while making saving more attractive. The also raised its to 7.1%. Strong overall growth can therefore continue while families spend less because daily costs and income worries feel worse.
The RBI survey showed weaker urban consumer confidence alongside a 25-basis-point repo-rate increase to 5.50%. These developments could weigh on , housing demand and other , but future data is needed to determine whether urban demand weakens persistently.
The RBI raised its to 7.1% from 6.7%, reflecting stronger . At the same time, it raised the inflation forecast to 5.2% from 5%, citing continuing price pressures. The contrast highlighted the gap between resilient macroeconomic indicators and household perceptions shaped by prices, employment and income.
The raised the by 25 s, from 5.25% to 5.5%, and shifted its stance from neutral to . Higher policy rates can feed through to bank lending rates, EMIs and credit demand, while improving incentives to save. The decision increased the possibility that weaker confidence would affect rate-sensitive urban spending.
Survey responses pointed to concerns about employment, rising prices and household incomes, pressures that can reduce and willingness to spend. Respondents’ assessments of spending and income reflected lived economic conditions rather than the . The findings therefore showed worsening sentiment even before the RBI’s October policy response.
The RBI’s September found that 54.5% of respondents believed had worsened. The survey covered 6,054 urban respondents across 19 major cities, with fieldwork conducted from September 10 to 20. The result compares with 50.5% in July 2026 and 40.9% in September 2025, showing a marked deterioration in perceived conditions.
India’s rose to 4.82% in August from 4.45% in July, with food and other consumer prices adding pressure. was lower at 4.31%, but the increase provided a difficult backdrop for household sentiment. The inflation data measured prices through official indicators, while the captured how urban respondents experienced economic conditions.