Omicron, inflation risks to business resumption, Nomura index at a record high

The Nomura India Business Resumption Index rose to a record high of 117.8 for the week ended December 19 from 116.6 in the prior week. The Japanese financial services firm, in its weekly report on Monday, said that even though supply-side bottlenecks persist, energy shortages are slowly improving but there is downside risk to consumption demand as the prices of white goods are set to rise amid already high core inflation.

Business resumption index is now nearly 18 percentage points (pp) above pre-pandemic levels.

Data released last week showed wholesale inflation accelerated to the fastest since 1991 in November, clocking the eighth successive month of double-digit increase at 14.2% while retail inflation based on the consumer price index hardened to a three-month high of 4.91% in the month from 4.48% in October.


The NIBRI considers the Google mobility indices, Apple driving index, power demand and the labour force participation rate. Mobility indices are based on a 7-day moving average. The pre-pandemic February 23, 2020 level is indexed at 100 and considered the base for comparisons.

A value of 100 refers to pre-pandemic levels of economic activity.

As per the index, mobility continued to improve, led by the Google workplace at 5.1 pp over the week and retail & recreation (2.4 pp) indices, even though the Apple driving index fell 3.6 pp.

“The labour participation rate fell to 40.9% from an eight-week high of 41.4% in the prior week,” Nomura said in the report.

Power demand rose 3.2% week-on-week over an already-elevated 3.7% previously.

“Omicron cases are gradually rising, but overall daily Covid cases and deaths are trending lower. The lower public fear factor amid the ongoing holidays and broader normalisation have led to mobility trending above pre-pandemic levels,” Nomura noted in the report.

Niti Aayog member VK Paul last week said that an outbreak of the Omicron variant in India similar to the UK, might lead to 14 lakh cases every day given our population.

While the pace of vaccination has picked up to almost 7million per day in December from 5.4 million daily last month, but with
only around 40% fully vaccinated, virus setback risks remain, Nomura said.

It maintained its gross domestic product (GDP) growth projection of 8.2% on-year 2021 and 8.5% in 2022, with lower sequential momentum from the fourth quarter 2021 onwards.