In its December bulletin, the Reserve Bank of India (RBI) highlighted a concerning trend, stating that real-time inflation is adversely impacting discretionary consumer spending.
This, in turn, is impeding the overall growth of manufacturing companies, including their capital expenditure.
The RBI’s observation underscores the immediate and tangible effects of inflation on the economy, particularly in the context of consumer behavior and corporate performance. The central bank emphasized that unless inflation is promptly brought back to the target and effectively controlled, there is a substantial risk of stalling economic growth.
The link between inflation, consumer spending, and manufacturing growth is a critical dynamic that the RBI is closely monitoring.
