“Commodity prices present an upward risk for inflation”

NEW DELHI: The Finance Ministry said on Friday that rising global commodity prices, especially crude oil and higher logistics costs, pose an upside risk to inflation, although it has sought to take comfort from the monsoons and the openness of the economy to reduce economy pressures.
Although the monthly economic report was silent on the rise in pump prices for gasoline and diesel, it recognized how rapidly food inflation was rising in urban areas. A surge in inflation prompted the RBI to maintain further rate cuts as wholesale price inflation climbed to 12.9%, the highest since at least 2012, while retail inflation was set at 6.3%, a six-month high.
“The localized restrictions due to the second wave could have resulted in disruption on the supply side contributing to price pressures in May 2021. With the encouraging progress of the southwest monsoon, interventions on the South side. supply in the market for legumes and edible oils, and the gradual unlocking of states, with a declining workload, would ease cost pressures in the future, ”says the report prepared by the economic division of the Ministry of Finance .
He presented a rosy picture of the economic recovery, while calling for rapid vaccination and filling gaps in health infrastructure. The ministry expects recent announcements to strengthen consumer sentiment as well as investment cycles.
Highlighting recent economic relief measures, the report says “the package should further oil the wheels of the investment spending cycle.”

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