Retail Inflation: The contribution of petrol and diesel in inflation has been decreasing since October last year, but at the same time another thing has come to the fore that the share of kerosene oil and firewood is increasing in the retail inflation rate. According to the latest report of State Bank of India, people in rural areas are now using kerosene oil and firewood more.
SBI’s Chief Economic Advisor expressed this apprehension
SBI Chief Economic Adviser Soumya Kanti Ghosh said that it seems that fuel consumption has already come down with the advent of Omicron’s new wave and people have shifted towards alternative sources like kerosene oil and wood. He said that this trend may gain more momentum in the coming days. This is not good for rural demand.
Russo-Ukraine war affected inflation
According to the report, the Russo-Ukraine war has affected inflation. Inflation data for March 22 shows that wheat, protein-rich food items especially chicken, milk, refined oil, potato, chilli, kerosene oil, firewood, gold and LPG are influencing inflation.
Prices of these items increased due to Russo-Ukraine war
The Russo-Ukraine War has made animal feed expensive as it was imported from Ukraine. Due to pressure on Ukraine’s supply of sunflower oil, Indonesia changed its export policy, which cut palm oil imports from there. The supply of soybean oil has been affected due to fears of a grain shortage in South America due to the war. Similarly, the price of milk has also increased significantly.
Retail inflation at 6.95 per cent in March
The retail price index rose 6.95 per cent year-on-year in March 22 as against 6.07 per cent in February. The main reason for this was the rise in the prices of food items.
SBI has predicted retail inflation to be above 7 per cent. After September, it can remain between six and a half to seven percent. SBI has estimated the inflation rate for this financial year to be around 6.5 percent.