RBI predicts accelerated growth in household consumption in fiscal 2024-25

The latest Reserve Bank of India bulletin suggests an acceleration in household consumption in India in the second quarter of fiscal 2024-25. This growth is expected to be driven by falling core inflation and a significant increase in rural demand.

The central bank noted that falling inflation in food and essential goods is boosting consumers’ disposable income, thereby increasing overall purchasing power. A pick-up in rural demand, especially for fast-moving consumer goods (FMCG) such as healthy lifestyle products, is further supporting this trend.

This trend reflects growing longevity and affluence, with companies targeting younger consumers with premium products. In addition, demand for FMCG is growing among older consumers due to rising affluence.

Increased recruitment activity by e-commerce and logistics companies, especially ahead of the festive season, is driving this surge in demand. These companies are expanding their workforce beyond metropolitan areas, reaching out to tier 2 and tier 3 cities.

E-commerce companies are preparing for higher online sales, which is leading to increased employment in logistics in warehousing, transportation, and delivery services. Telecommunications and internet service providers are also expected to contribute significantly to the job growth.

TeamLease Services reports that 62% of companies in these sectors plan to increase hiring by the end of the year, which will further boost household income and spending. The RBI admitted that the agriculture sector was sluggish in the first quarter, but this was offset by solid performance in manufacturing and services sectors.

(Based on information from the agency.)