NEW DELHI: Household consumption is all set to grow faster in the second quarter amid easing retail inflation, and a revival in rural demand, the RBI said on Friday in its Monthly Bulletin for September. Retail inflation in July and August remained below 4% (3.6% in July and 3.65% in August), even if it showed slight uptick in the latter month.
As per the RBI bulletin, the demand for fast-moving consumer goods (FMCG) is also accelerating as companies target older customers with healthy lifestyle products in response to rising longevity and affluence and younger ones with premiumisation.
The central bank points towards increased hiring activities across sectors ahead of festive season. This, it says, is also likely to push up consumption. E-commerce majors have ramped up hiring ahead of the festival season, not just in the metros but in tier 2 and 3 cities as well.
Logistics hiring is also rising to support increased transportation, warehousing and delivery activities. Citing a Team Lease Services report, RBI says 62% companies across telecom, internet service providers and allied industries intend to expand their workforce in this year.
The RBI blamed the marginal increase in inflation in August to an unfavourable base effect of around 5 bps while the index remained unchanged at the previous month’s level (zero momentum). However, it said that headline CPI inflation coming below the Reserve Bank’s target for the second consecutive month in August is a positive development.
Though it sounded cautious as some vegetable price shocks have begun to reverse, and an unfavourable base effect may haunt the September inflation number.
The RBI report attributes the robustness in private investment to capital investments made towards energy transition. “…energy transition has accelerated in recent years, with the pace of clean technology deployment and capital investment surging to record levels,” says the report.
Increased hiring activities across sectors
The central bank points towards increased hiring activities across sectors ahead of festive season. This, the Reserve Bank of India says, is also likely to push up consumption. E-commerce majors have ramped up hiring ahead of the festival season, not just in the metros but in tier 2 and 3 cities as well.