RBI experiences fall in consumption

A survey by RBI has sharply cut the forecast of real private final consumption expenditure (PFCE) growth, reflecting lower household demand as indicated by moderation in the production of consumer durables. The forecast of real PFCE growth has been revised sharply down by 250 basis points from 8% in the May 2019 round of the RBI’s survey of professional forecasters to 5.5% in the September 2019 round.

In this regard, the RBI’s latest monthly bulletin also referred to capital goods production declining by around 8% in the April-August 2019 period. PFCE, however, is expected to improve to 7% during 2020-21, per the latest survey. The PFCE growth forecast has been pared from 8.1% in the March 2019 survey to 8% in the May 2019 survey to 7.6% in the July 2019 survey.

PFCE, according to the Ministry of Statistics and Programme Implementation, includes final consumption expenditure of households and non-profit institutions serving households like temples and gurdwaras.