Many Indians are cutting down on fried foods and even vegetables because Ukraine War Rising prices for commodities ranging from cooking oils to fuels threaten a substantial recovery in the consumption-driven economy after two years of battling COVID-19.
Consumers in Asia’s third largest economy are feel the bite as companies shifted costs higher since the invasion, weathering the first hikes in five months this week in the prices of diesel and gasoline, as well as more expensive vegetable oils.
“Only God knows how we will manage this level of price increase,” said Indrani Majumder, the sole earner in a family of four in east Kolkata.
She said that these days, her family eats boiled food more to save money on cooking oil. It was just one of nearly a dozen homes where people said they had taken similar steps.
India’s economy expanded at a slower-than-expected pace in the October-December quarter, and economists expect current growth to slow further, as high fuel prices boost inflation. broadcast.
Private consumption contributes the largest share of gross domestic product, nearly 60%.
But since the invasion in late February, which Russia called a “special operation”, Indian companies have been price increase milk, instant noodles, chicken and other staples from about 5% to 20%.
About 800 million of its nearly 1.4 billion people have received free government supplies of essential food during the pandemic, and even today’s small price increases could mean budget cuts. their decrease.
Pronab Sen, formerly India’s chief statistician, warned families’ finances could fall short for the third year in a row.
“The process of rebuilding savings has only just begun after the pandemic,” he added. “Because of this latest shock, they will have to cut back on consumption.”
Rising global crude prices have prompted companies in the import-dependent country to raise retail prices of gasoline and diesel twice this week. India imports 85% of its crude oil, the price of which has increased by almost 50% this year.
The South Asian country is also the world’s largest importer of cooking oil, shipping nearly 60 percent of its needs.
However, the price of palm, the country’s most widely consumed cooking oil, has risen 45% this year. And supplies of sunflower oil, which Ukraine and Russia produce in large quantities, have been disrupted.
Some wholesalers say their cooking oil sales have fallen by a quarter in the past month due to rising prices.
These factors helped keep India’s retail inflation in February above the central bank’s comfort level of 6% for a second straight month, while the wholesale rate was more than 13%.
“The timing of input price inflation couldn’t be worse amid slowing consumer trends,” said financial services firm Jefferies.
The central bank said it is monitoring crude oil and commodity prices ahead of its next monetary policy meeting in early April. But markets do not expect the Reserve Bank of India to change interest rates. key, as it appears to be a priority for growth.
This stance compares with global central banks, which have either raised interest rates or are considering whether to do so to rein in inflation. For example, this week, US Federal Reserve policymakers called for major interest rate hikes in May.
For consumers, there is little visual relief.
The Confederation of Indian Traders estimates that the input costs of manufacturers of long-term consumer goods and fast-moving consumer goods (FMCG) will increase by 10 to 15 percent this month as fuel prices rise, an outlay. fees are passed on to the end consumer.
In Kolkata, vegetable supplier Debashis Dhara said higher shipping costs will drive vegetable prices up 5% this week. His sales have halved since February.
India’s Mother Dairy and Amul have raised milk prices by nearly 5% this month, while FMCG companies such as Hindustan Unilever and Nestle are charging more for items such as instant noodles, tea and coffee.
Broiler chicken prices have jumped nearly 45% in six months to a record 145 rupees ($1.90) per kilogram this week, as feed ingredients corn and soybean meal become more expensive after supplies from the affected Black Sea area.
Fertilizer prices have risen to a record $150 a ton since Russia, one of the biggest producers, brought tanks and troops into Ukraine.
“It has become very difficult to manage our monthly budget,” said Archana Pawar, a housewife in the financial capital Mumbai. “This kind of price increase forces us to cut consumption.”
