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Informist, Wednesday, Nov. 20, 2024

NEW DELHI – Patterns of seasonality across various major economic and financial indicators have become more pronounced, according to a paper by Reserve Bank of India staff. The seasonal pattern broadly remained stable in 2023-24 (Apr-Mar) compared with the pre-COVID pandemic period, before 2020, the paper said.

"...seasonal variations have become more pronounced across several indicators such as cash in hand and balances with the RBI, demand deposits, prices of major vegetables, industrial production, passenger vehicle sales, and merchandise exports," the paper said. "Some of the indices and banking and monetary aggregate also witnessed a shift in their peak and trough months."

Seasonal variations in GDP and gross value added have increased since the COVID-19 pandemic, even after adjusting for the pandemic-induced volatility and data points. The trough in GDP growth occurred in Apr-Jun, while gross value added growth hit a low in Jul-Sept, the paper said. Most monthly growth indicators see their year-end peaks in March, while quarterly growth indicators hit the corresponding peak in Jan-Mar.

"Quarterly data highlight increased seasonal variation in real GDP, especially in government expenditure, with agriculture showing the most significant seasonal effects," the paper said.

Headline CPI inflation, which the RBI targets in order to achieve price stability, peaks in October and eases in March. Consumer inflation is primarily driven by the seasonal pattern of food prices, with over half the basket's weightage in this category. Volatility and seasonality in tomato, onion and potato prices – the three vegetables with the highest weightage – have increased, the paper said.

"Prices of potatoes and onions increase in November and the seasonal pressures ease in February and May, respectively. Tomato prices increase during July and moderate by March," the paper said. The other components of CPI show lower seasonal variations. Wholesale prices reach a seasonal high in November and ease soon after, in January and February.

Seasonal variation remained high in the Index on Industrial Production and its components. On the output front, mining shows the greatest seasonality, hitting a trough in the monsoon. Crude oil is the least seasonal component of the eight core industries, the paper said. 

"In most indicators of the industrial outlook survey, manufacturers assess high seasonality in Q3 and Q4 (Oct-Dec and Jan-Mar) and low in Q1 and Q2 (Apr-Jun and Jul-Sept), except for the selling price assessment and expectations," the paper said.

It noted that the COVID-19 pandemic caused disruptions in economic activity and seasonal data patterns, and the post-pandemic period has not been long enough to gauge seasonality with high confidence. The seasonal factors could be subject to changes as production patterns change post-pandemic and are captured in incoming data.  End

Reported by Aaryan Khanna

Edited by Avishek Dutta

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