Explained: Why is everything becoming so expensive
The World Bank expects the growth in India to moderate in Financial Year 2023 due to rising inflation, supply disruptions and moderating global growth outlook.
New Delhi, May 02: Step out of your home and everything you touch will eventually end up burning your pocket. This is thanks to the rising prices, be it fuel, cooking gas or vegetables.
The World Bank expects the growth in India to moderate in Financial Year 2023 due to rising inflation, supply disruptions and moderating global growth outlook. Some of the key reasons for this scenario is the ongoing Russia-Ukraine war and the lockdown at the Shanghai port. The erratic weather in the country is also another reason for the rising prices.
"Even as adverse spillovers through direct trade remain limited, the Russia-Ukraine war may have a significant impact on inflation through the global commodity markets channel, the RBI said. In the case of edible oils, the loss of supplies of sunflower oil from the Black Sea region is likely to keep domestic prices under pressure," RBI's April bulletin said.
The prices of tomato has seen a 71 per cent increase in one year, while in the case of potato, sunflower oil, mustard oil, masoor oil, the rise has been 17.1, 16.4, 14.5 and 14.1 per cent respectively. The prices of onion, milk, atta and sugar have risen by 8.2, 6.8, 5.6 and 4.5 per cent respectively over the past year
Petrol prices have gone up from Rs 95.4 to Rs 105.4 in the past year. In the case of diesel it has shot up from Rs 86.7 to Rs 96.7
The global inflation is forecast to be 1.5 percentage points higher due to the increase in shipping costs in 2021. The rise in shipping costs peaks in 12 months and lasts up to 18 months.
Further by 2021 the container shipping costs surged by six times their pre-pandemic levels. Now they continue to remain at elevated levels. There are strict containment measures in China and container shortages at Asian ports which has led to piling up of containers in the ocean.
According to Project44, a supply chain visibility platform, the composite index of spot freight charges on the eight major ocean routes was 60 per cent higher year on year as of April 21 2022. The freight charges between Los Angeles to Shanghai were 142 per cent higher. The charges charges on Shanghai to Los Angeles route were 108 per cent higher.
Further the number of vessels that berthed at Shanghai port dropped by half from 30 per day to 14, Project44 said.