The report states that the moderation in food inflation and encouraging prospects for the agricultural output will support the momentum in rural demand
Even after the current and future consumer confidence indices showed improvement in March 2025 compared to the previous survey in January 2025, sentiments around discretionary consumer spending, though improving, continue to remain weak, as per a report.
In its report, CareEdge Ratings stated that pessimism around the current employment scenario eased while the employment outlook for the year ahead remained optimistic. The report noted that rural sentiments hold up well as more than 50 per cent of rural households expect an improvement in income and employment conditions over the next quarter, in line with the trend of the previous surveys.
The moderation in food inflation and encouraging prospects for the agricultural output will support the momentum in rural demand, as highlighted by the report. Work demanded under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme has shown a rising trend in recent months. This needs to be monitored closely for any signs of distress in the rural economy, the report added.
Sharing the update around the key frequency data, the report noted that on the urban demand front, passenger vehicle (PV) sales recorded encouraging growth in the recent month and growth in air passenger traffic remained healthy. Led by a broad-based contraction witnessed in sales of motorcycles, mopeds and scooters, the report noted that two-wheelers sales disappointed in February. The moderation in inflation, particularly the food prices, is a positive for consumption in the economy, the CareEdge Ratings stated.
As far as the recent monetary policy committee (MPC) meeting of the Reserve Bank of India (RBI) is concerned, the RBI MPC reduced the policy repo rate by 25 basis points to six per cent in its April meeting to support growth amidst improving inflation outlook. The report stated that the change in stance suggests scope for further easing. CareEdge Ratings expects another 50 bps rate cut in FY26, with room for a deeper rate cut cycle if the global trade war severely dents economic prospects.
