Inflation could hamper nascent economic recovery


Indeed, while much of the organized business sector is doing very well, having negotiated the supply disruptions – reflected in the strong tax collections – one is less sure of the state of the rest of the economy. economy.

Rising prices and high input costs could affect demand, slowing the pace of the recovery in the coming months. This is worrying for sectors such as two-wheelers where demand is otherwise low.

Indeed, the sharp drop in tractor sales in October raised concerns about the conditions of the rural economy. Bank of America analysis reveals that rural wage growth has slowed, averaging 2.7 percent year-on-year over the April-July period, compared to a much better 7.4 percent year-on-year increase over the course of the period. from the same period last year. In addition, the deceleration was more marked for non-farm wages than for farm wages.

Driven by an increase in rural unemployment which jumped to 7.91% in October from 6.06% in September, overall unemployment rose from 6.86% to 7.75%, according to data from the CMIE.

At the same time, with the weakening of favorable base effects, growth in manufacturing output moderated sharply to 3.1% yoy in September from 12% yoy in August, with industry leading the way. the drop, which is sort of a reality check.

Indeed, while much of the organized business sector is doing very well, having negotiated the supply disruptions – reflected in the strong tax collections – one is less sure of the state of the rest of the economy. economy.

The good news is that exports are on a roll; Merchandise exports increased for the 11th consecutive month to $ 35.65 billion, up 43% year-on-year in October and 36% from October 2019. In addition, non-petroleum and non-gemstone products and jewelry accounted for a significant share of imports in September and October, reflecting a pickup in business activity.


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