Indian consumers' plight amid rising prices is about to get worse
finance ministry today flagged an upcoming likely scenario that offers no hope to the common people to get an escape from the price pressure. The recent spike in the prices of essential food items, which have doubled in most cases across India, has been attributed to geographical anomalies like heatwave and pestilence. The El-nino influence paired with a delayed impact of constantly reducing WPI on retail inflation is expected to make the situation worse for consumers, the finance ministry suggested in its annual economic review.
«However, the lagged impact of monetary policy on credit demand may dampen the incipient rekindling of inflation,» the ministry said. Retail inflation had eased to a 25-month low of 4.25 per cent in May on an annual basis. The falling inflation numbers might present a picture of price rise moderating in India, but the gap between wholesale and retail numbers is still wide.
India's WPI or wholesale inflation had contracted 3.48 per cent in May primarily due to fall in prices of mineral oils, basic metals and crude petroleum & natural gas. However, data shows that there has been a ubiquitous increase in food prices, with spices too taking a hit. With India being an agrarian economy, the impact of El-nino has usually been a cause of worry for the markets.
The report by the finance ministry flagged risks to growth in FY24 stemming from geopolitical issues and the impact of the El Nino phenomenon. «Factors that can constrain the pace of growth include escalation of geopolitical stress, enhanced volatility in global financial systems, sharp price correction in global stock markets, high magnitude of El-Nino impact, and modest trade activity,» it said. The El-nino forecast had also compelled
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