'Low inflation boost for competitiveness': RBI

MUMBAI: High-frequency indicators in Nov show activity is holding up and demand is robust, even though headline CPI inflation edged up, but stayed below the lower tolerance level.

RBI's state of the economy report, published on Monday, said "benign inflation during the month kept input cost pressures low for firms", hence "limiting hikes to selling prices to maintain competitive pricing by firms in global markets".




In services PMI, "deceleration continued in both input prices and selling prices as a result of the receding cost pressures and firms' efforts to secure new business".

The report said the economy "was not fully immune to the external sector headwinds", but coordinated fiscal/monetary/regulatory moves "have helped to build resilience over the year".

"Bolstered by strong domestic demand, the economic growth has been robust," while a "benign inflation outlook provided adequate space for monetary policy to support growth". It added that "continued focus on macroeconomic fundamentals and economic reforms should help unlock efficiencies and productivity gains to firmly keep the economy on the high-growth trajectory amidst a fast-changing global environment".

Globally, trade/tariff spillovers on flows and supply chains are still unfolding, creating "heightened global uncertainties and concerns about the prospects for global growth". Equity markets "remained ebullient during much of the year on Big Tech optimism", but valuation worries triggered "some risk-off sentiments", while portfolio flows to emerging markets slowed.

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