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Rising Covid spends, fuel prices, online delivery will crowd out consumer demand, warns SBI report
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Last Updated: May 17, 2021, 07:07 PM IST
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As the pandemic rages through the country, it is worthwhile to look beyond the headline inflation as rural core has now jumped to 6.4 per cent in April and will rise further in May. The increasing health spend due to the pandemic is having a meaningful impact in rural areas, Ghosh said.
The report said households inflation expectations have softened.
The massive increase in healthcare spends, especially in the hinterland, steadily rising fuel prices and online delivery of articles will increase inflation pressure much higher on one hand and crowd out other consumer spending on the other, putting a big question mark on overall growth that s still being driven by consumption demand, according to a report.
Rising fuel prices crowding out discretionary household spending: SBI Research
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In aggregate terms, family health expenditure may increase by as much as Rs 66,000 crore, or 11% of their consumption expenditure, this year from FY20. Consumers will feel the double pain of rising health expenditure and lower incomes in this financial year as the second wave of Covid-19 spreads across India, SBI Research said in a report.
Expenditure on oil in December resulted in SBI Research’s estimates of headline inflation coming in at 5.35% for April, about 60 basis points higher than the CSO estimate.
Rising fuel prices have crowded out discretionary household spending on items like health, grocery and utility services,