Indians Tighten Belts During Ukrainian War Inflate Fried Foods, Vegetable Rates

New Delhi:

Many Indians cut down on fried foods as well as vegetables as the Ukrainian war tossed the prices of goods from edible oil to fuel, threatening a rapid recovery in the consumption-based economy after two years of fighting Covid-19.

Consumers in Asia’s third -largest economy felt the bite as the company suffered a cost spike since the invasion, fighting the first rise in five months this week in diesel and petrol prices, as well as more expensive vegetable oils.

“God only knows how we will manage this level of price increase,” said Indrani Majumder, the only person working in a family of four in the eastern city of Kolkata, adding that two years ago the outbreak had halved wages.

Today his family eats more boiled food to save on cooking oil costs, he said. It’s just one of nearly a dozen homes where people are said to be taking similar steps.

The Indian economy grew at a slower -than -expected pace in the quarter from October to December, and economists forecast lower growth in current growth, as high fuel prices led to a surge in inflation.

Private consumption accounts for the largest share of gross domestic product, at almost 60%.

But since the late February invasion, which Russia dubbed a special operation, Indian firms have raised the prices of milk, instant noodles, chicken and other key items by about 5% to 20%.

About 800 million of a population of nearly 1.4 billion received free government staple food supplies during the outbreak, and even a small price increase now could cause their budgets to suffer.

Family finances could remain anemic for the third year in a row, warns Pronab Sen, India’s former head of statistics.

“The process of rebuilding storage only started after the outbreak,” he added. “Because of this latest shock, they had to reduce consumption.”

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Rising global crude oil prices have prompted companies in the import -dependent country to raise retail prices of petrol and diesel twice this week. India imports 85% of its crude oil, which has seen prices rise by almost 50% this year.

The South Asian country is also the world’s largest importer of edible oils, sending nearly 60% of its needs.

But the price of palm oil, the most widely used edible oil in the country, has jumped 45% this year. And the supply of sunflower oil, produced by Ukraine and Russia in large quantities, has been disrupted.

Some wholesalers said their edible oil sales had fallen a quarter in the past month as prices rose.

These factors helped keep India’s retail inflation in February above the central bank’s comfort level of 6% for the second month in a row, while the wholesale rate was more than 13%.

“The timing of input price inflation is unlikely to be worse in the context of slow consumption flows,” financial services firm Jefferies said in a note.

The central bank said it was monitoring crude oil and commodity prices ahead of its next monetary policy meeting in early April. But the market does not expect the Reserve Bank of India to change key rates, as it appears to prioritize growth.

This stance compares with global central banks, which have either raised rates or are considering whether to do so to curb inflation. For example, US Federal Reserve policymakers called this week for a big rate hike in May.

For consumers, there is little relief to be seen.

The All India Traders Coalition estimates input costs for makers of durable consumer goods and fast moving consumer goods (FMCG) will increase another 10% to 15% this month as fuel prices rise, an expense destined to be passed on to end users.

In Kolkata, vegetable seller Debashis Dhara said higher transportation costs would increase vegetable prices by another 5% this week. Its sales have already halved since February.

Mother Dairy and Amul India raised milk prices by almost 5% this month, while FMCG companies like Hindustan Unilever and Nestle charged more for items such as instant noodles, tea and coffee.

Broiler prices have jumped nearly 45% in six months to a record 145 rupees ($ 1.90) a kilogram this week, as staple foods of corn and soy flour have become more expensive after supplies from the Black Sea region were affected.

Fertilizer prices have soared to a record $ 150 a tonne since Russia, one of the largest producers, launched tanks and troops into Ukraine.

“It becomes very difficult to manage our monthly budgets,” said Archana Pawar, a housewife in the financial capital Mumbai. “Price increases like this are forcing us to reduce consumption.”


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