Capacity Utilisation Improves, Inflation Expectations Ease: RBI Survey

Capacity utilisation in manufacturing sector rose in the second quarter of the fiscal, even as inflation expectations for the current period eased and consumer confidence improved, according to surveys conducted by the Reserve Bank of India.

Aggregate level capacity utilisation for the manufacturing sector improved to 74% in the second quarter of FY23 from 72.4% in the previous quarter, the survey findings, released on Wednesday, highlighted.

The seasonally adjusted capacity utilisation for Q2 also increased by 20 basis points to 74.5% from its level in the previous quarter.

Households’ inflation perception for the current period moderated by 20 basis points to 9.6% in January 2023.

Inflation expectation of households rose by 10 basis points for three months ahead period, whereas their one-year ahead expectations remained unchanged from the November 2022 round of the survey.

Among consumption categories, the proportion of respondents perceiving price rise was highest for food group over both the horizons, as also witnessed in the previous two survey rounds.

Respondents expect higher price pressure for household durables and cost of housing over the next three months, as compared to the previous survey round.

Consumer confidence improved further, both for the current period as well as for the year ahead.

The current situation index continued on its recovery path for the ninth survey round, since the historic low recorded in mid-2021 and increased by 1.3 points to 116.2 in January 2023, on the back of improved sentiment on general economic situation and household income.

The one-year ahead outlook, as reflected by the future expectations index, also rose by 1.3 points to a two-year high, on the back of improved optimism on general economic situation, employment and income over the next one year.