New Delhi
Putting an end to the debate on India’s growth based on the government’s capex push, global rating agency Fitch Ratings said that consumer spending will increase with elevated consumer confidence, a sign of enhanced income for people.
The credit rating agency in its June report of Global Economic Outlook (GEO) said that India will see higher Consumer spending with elevated consumer confidence. Expectations of better than expected monsoon will support growth and make inflation less volatile. The rating agency has elevated India’s growth forecast by 20 basis point to 7.2 per cent for fiscal year 2024-25. Earlier in March Fitch has forecasted India’s growth at 7 per cent.
Backing its anticipation for consumer spending in coming quarters, the rating agency said, that average rainfall during June-September is likely to limit the inflationary risks from a food price spike, incentivizing spending.
According to official forecasts in the country, the rainfall during June-September is likely to be above average.
The report forecasts headline inflation declines to 4.5 per cent by calendar year-end, and average inflation rests at 4.3 per cent in 2025 and 2026, staying slightly above the midpoint of RBI’s target of 4 per cent with a variation of 2 per cent.
Headline inflation is a measure of the total inflation within an economy, including the prices of commodities like food and energy.
India’s retail inflation rate softened marginally in May to 4.75 per cent, continuing its moderation trend, though food prices continue to remain a pain point.
