Pricey commodities to impact economy: Ind-Ra

As per Ind-Ra, a higher retail inflation not accompanied by a commensurate increase in wage growth will adversely impact the consumption demand and in turn investment revival in the economy.

“Though a spike in global agricultural commodity prices could benefit India, it may not move the needle favourably because India, despite the world’s biggest exporter of Basmati rice, exported just $6.59 billion worth of cereals and imported vegetable oil and pulses worth $9.66 billion and $1.44 billion, respectively, in FY20.” “On the other hand, India’s import bill on oil, coal and nonferrous metals was $129.86 billion, $22.45 billion and $13.14 billion, respectively.”

According to the agency, a faster-than-expected recovery in demand, the stimulus measures announced by the US, the roll out of Covid-19 vaccine and ultra-low interest rates are fuelling the surge in commodity prices.

Consequently, energy commodity prices over the past six months have increased by 55.4 per cent.