Russian attack on Ukraine set to increase inflation
Rising global tensions and the Russian attack on Ukraine have fueled a surge in oil prices. The rise in oil and gas prices is directly related to food prices.
In view of the ongoing Assembly elections in five states, the central government has kept the increase in the prices of petrol and diesel stable for the past two months, which is now set to increase with more buoyancy in coming weeks. Even under normal circumstances, the price rise was certain, but after the Russian armed forces’ invasion in Ukraine, consumers' pockets are going to be hit hard in our country. The reason is that the war between the two prominent members of the former USSR has suddenly increased the price of crude oil globally. This is bound to influence the prices of petroleum products everywhere. This could pose further risks to India's rising inflation. We import more than 80 percent of our crude oil requirement from other countries every year. Crude oil imports account for about 25 percent of India's total imports. Crude oil prices hit $ 96.7 a barrel on Tuesday, the highest since September 2014, after Russian President Vladimir Putin deployed his troops to Donetsk and Luhansk in Ukraine.
Rising global tensions and the Russian attack on Ukraine have fueled a surge in oil prices. The rise in oil and gas prices is directly related to food prices. Since it will become costly to transport goods from one place to another, everything else is sure to be expensive too. India imports crude oil worth $ 150 billion every year. Due to this the trade balance of the country may deteriorate. In addition to petroleum products, Russia and Ukraine export sunflower oil in a big way and the two countries also account for 25 percent of wheat exports. This is sure to make a difference to Asia and especially India. Inflation resulting from the war will have an impact not only on Russia and Ukraine, but on the whole world, including US and European nations. It has to have an impact on India's inflation for sure.
Corona virus had already troubled the world in the past two years, now the trouble of war has come. By the way, despite the third wave of Covid in India, the first month of this year was good in terms of employment and recruitment. According to a job platform, Jobseek index, there was a 41 per cent year on year growth in recruitments in January 2022. In January last year, this index was at 1925, which reached 2,716 this year. The sectors which proved to be effective for increasing recruitment are IT, Software, Retail and Telecom. Along with this, the growth was 29 percent in the pharma industry, 10 percent in medicine and healthcare, 8 percent in oil and gas, 8 percent in insurance, 7 percent in fast consumer goods (FMCG) and 2 percent in manufacturing. FMCG sales in the month of January 2022 decreased by 10 percent as compared to December 2021. This happened because of the third wave caused by the Omicron variant. According to Bijom, a retail intelligence tracking platform, sales per active general store declined by 5 per cent in January. However, the third wave of Covid is now on the downside, so it is believed that the February report will reach the level of prior to the third wave.
(Author is a senior journalist and columnist)