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Vegetable prices skyrocket: Market analysts' view
Inflation in India is expected to have edged up on higher food costs in March, snapping a three-month easing trend that will give RBI less scope to support the economy amid fresh signs of slowdown.
The inflation on the commodities is back in vogue, thanks to the spike in the rates of vegetables since March, breaking the three month easing trend. This has weakened the capacity of Reserve Bank of India (RBI) to cope, providing less scope to support the thriving economy in the midst of slowdown.
The analysts also predict the oncoming less than normal monsoons to shower this summer will largely affect as to how the prices behave in the coming months.
According to the reports, the wholesale prices rose to almost 5.3 percent the previous month, cutting the past the regular 4.68 percent rise that was seen in February, as per the latest study of comparisons. There is also slight consumer inflation from 8/10 to 8.19 in the month of March.
The economy has been struggling to fight inflation and stagnant growth. The overall growth has almost reduced to less than 5 percent in the last two years, say the analysts. This apart, the retail inflation has been averaging at 10 percent, to call it the worst ever.
The sudden shoot up on the vegetable prices after a steady three months is mostly accounted due to unseasonal rains and hails in most parts of the country. The summer crop of mangoes is set to be heavily affected because of this development.
Also called as El Nino weather, this would trigger lower production of summer crops such as rice, sugarcane and oilseeds. A similar incident happened in 2009 leading to the worst output on the crop yield.
“El Nino and its consequences on the Indian Economy is a tail risk at this juncture” predict the analyst group at DBS Group Research. “But if these materialise, then the economy would remain in a soft patch in the fiscal year 14/15” they summate.
The turn of events will also complicate the political scenario in the Country that awaits a new government to take over at New Delhi after the National Elections in May.
The rise in inflation will also be a primary concern for The Central Bank which aims currently to lower the retail inflation to 6 percent by January 2016.
