Untraded commodities cause inflation: NCDEX

New Delhi, May 2: National Commodities and Derivatives Exchange Ltd (NCDEX) has said commodities not traded on the Exchange have contributed more to inflation.

"Contribution of commodities traded on the Exchange is lower than the inflation contribution by those not traded on the Exchange," NCDEX's Managing Director P H Ravikumar said.

The inflation contribution of commodities not traded on the exchange was 0.83 per cent in this fiscal which is three times higher than the inflation contribution of commodities traded on the exchange which stood at 0.3 per cent.

Contribution of all cereals to inflation was generally higher than the overall inflation rate.

However, inflation in metals was much higher than that in food grains due to global factors.

Prices of commodities traded on exchanges have gone up due to stagnant productivity and supply shortfalls.

Commenting on the RBI's decision to permit domestic producers and users of base metals (alluminium, copper, lead, nickel and zinc), to hedge their price risk in international commodity exchanges, he said this would result in diversion of hedging operations from domestic to international exchanges.

NCDEX which is the largest commodity exchange in the country with an average daily turnover of Rs 4,500-Rs 5,000 crore a day has a market share of around 55 per cent.

UNI