Mumbai: The demand-supply imbalances may proceed to exert stress on meals objects akin to pulses and edible oils, the Reserve Bank of India (RBI) mentioned in its Annual Report on Thursday.
However, the costs of cereals may soften going ahead on the again of bumper foodgrains manufacturing in 2020-21, in keeping with the report.
The apex financial institution expects the worldwide crude oil costs to stay risky within the close to time period. The hole between the Wholesale Price Index (WPI)- and Consumer Price Index (CPI)-based inflations mirrored the behaviour of meals inflation, the report mentioned.
It added that CPI-based meals inflation surged following a nationwide lockdown final yr, even because the meals inflation captured in WPI eased. “This reflects the role of supply chain disruptions and opportunistic pricing in raising mark-ups.”
The RBI additionally mentioned the extent of retail worth improve within the post-lockdown interval was additionally a lot increased than the same old summer time uptick in meals costs.
The substantial wedge between wholesale and retail inflations in the course of the yr pointed to persistence of supply-side bottlenecks and better retail margins, underscoring the significance of provide administration, the RBI mentioned within the report.
“Pressures from food items like pulses and edible oils are likely to persist in view of supply-demand imbalances, while cereals’ prices may continue to soften with the bumper foodgrains production in 2020-21,” it mentioned.
On crude oil costs, it mentioned the costs have picked up on optimism of demand restoration and continuation of manufacturing cuts by OPEC+ nations. Crude oil costs are anticipated to stay “volatile in the near term”, the RBI mentioned.
“Cost-push pressures have also emanated from non-energy commodity prices and could firm up further as economic activity normalises and demand picks-up,” it added.
The RBI mentioned the impression of the second wave of pandemic may additionally have an effect on inflation going ahead.
“As pandemics typically leave markets less competitive, the increase in number of active COVID-19 cases with the beginning of second wave from March 2021 along with the associated effects on supply chains amid containment measures could also affect inflation going forward,” mentioned the report.
Headline inflation, measured by year-on-year modifications in Consumer Price Index, was elevated for many a part of the yr led by provide chain disruptions as a result of pandemic and spikes in key meals costs.
The headline inflation throughout 2020-21 picked as much as a median 6.2 per cent, up by 140 foundation factors (1.4 share) from the earlier yr, the RBI mentioned.
The WPI-based inflation throughout 2020-21 remained subdued, went into deflation throughout April-July 2020 earlier than reaching an intra-year low of (-)3.4 per cent in May 2020. It was the bottom in 54 months primarily on account of fall in international commodity costs of non-food main articles and reduce in demand in the course of the lockdown.
WPI-based inflation softened to 1.3 per cent in 2020-21 from 1.7 per cent in 2019-20.
#mute
