Rising commodity prices to impact India's economy: Ind-Ra
by Nidhi Bhati
India Ratings and Research (Ind-Ra) has stated that a surge in global commodity prices would affect retail and wholesale inflation differently leading to policy implications. The agency has cited faster-than-expected recovery in demand, stimulus measures announced by the United States (US), rollout of Covid-19 vaccine and ultra-low interest rates as primary reasons for the surge in commodity prices. Ind-Ra’s analysis further shows that a price increase of one per cent in edible and crude oil will increase the retail and wholesale inflation by seven basis points (bp) and 13 bp, respectively. It opines that a higher retail inflation not accompanied by a commensurate increase in wage growth would adversely impact consumption demand and consequently investment revival in the economy.