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Resource centre on India's rural distress
 
 

Prices of food, industrial products and oil revised


Prices across the three segments food, industrial goods and oil that determine inflation rising, the year-end inflation targets have been revised. The government had earlier estimated end-March inflation at 6% but RBI now has raised it to 7%.

The Food and Agriculture Organisation has raised an alert over a potential spike in global prices of sugar and cereals, especially wheat. Though India might just get away thanks to a bumper output this year, it could get caught in the spiralling milk and edible oil prices.

But it isn't just the monthly food bill that you need to worry about. Even your conveyance bill, which has seen six rounds of upward revision in seven months, could pose a problem as oil producers are predicting that crude oil prices will remain at three-digit levels.

According to observers "While the government had resisted raising prices for diesel for a number of months, a 4-5% price increase can be expected shortly," says a research note of a multinational bank.

The government is discussing ways to soften the impact, which could come through tax cuts or subsidy to oil firms. But oil is not the only commodity of concern. With economic recovery, prices of most commodities, have risen because of growing demand from China and India. Commodities posted a strong performance in 2010, with copper, tin, gold and cotton at all time highs and silver and sugar at 30-year highs. The trend is likely to continue, according to observers.