RBI says higher retail inflation weighs on PCE
Posted Date – Fri 06/23/23 11:45pm
New Delhi: Higher retail inflation weighed on personal consumption expenditure, the Reserve Bank of India (RBI) said.
In the June 2023 monthly bulletin released on Friday, according to national accounts data and corporate performance observations, rising retail inflation led to a slowdown in personal consumption spending, leading to smaller business sales and reduced private investment towards capacity building.
Lower inflation and stable inflation expectations would revive consumer spending and boost corporate revenues and profitability, the best incentive for private capital spending,” the bulletin said in its “Economy” article.
Reserve Bank of India Governor Shaktikanta Das said earlier this month that the central bank’s Monetary Policy Committee (MPC) has recognized that the forecast for 2023 will be driven by rising inflation, strained financial conditions and geopolitical tensions. The pace of global economic activity will slow down this year.
The pace of monetary tightening has eased in recent months, but uncertainty remains over its future trajectory as global inflation continues to run above target,” he said at a Monetary Policy Committee meeting earlier this month to consider buybacks interest rate added.
The announcement further stated that the Unified Payments Interface (UPI) is expected to account for 90 percent of retail digital transactions within the next five years.
This will be higher than the 75.6 percent in 2022-23, the central bank announcement said.
