Higher retail inflation has hit personal consumption expenditure: RBI

The Reserve Bank of India has said that higher retail inflation has impacted personal consumption expenditure

New Delhi: The Reserve Bank of India (RBI) has said that higher retail inflation has impacted personal consumption expenditure.

In its monthly bulletin for June 2023, released on Friday, it observed on the basis of national accounts data and corporate results, that rising retail inflation has slowed down personal consumption expenditure, which has resulted in scaling down of corporate sales and reduction in private investment towards capacity creation.

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Bringing down inflation and stabilising inflation expectations will revive consumer spending, boost corporate revenues and profitability, which is the best incentive for private capex,” the bulletin’s article on “State of the Economy” said.

RBI Governor Shaktikanta Das earlier this month had said that the central bank’s monetary policy committee (MPC) had recognised that the pace of global economic activity is expected to decelerate in 2023, dragged down by elevated inflation, tight financial conditions, and geopolitical tensions.

The pace of monetary tightening has slowed in recent months, but uncertainty remains on its future trajectory as inflation continues to rule above targets across the world,” he had added during deliberations on repo rate at the MPC meeting held earlier this month.

The bulletin further said that unified payments interface or UPI is expected to account for 90 per cent of retail digital transactions volume in the next five years.

It will be up from 75.6 per cent in 2022-23, said the central bank bulletin.