Edible oil, wheat could become dearer as Russia takes on Ukraine
New Delhi: The unfolding situation in faraway Europe is set to unsettle middle-class India. Prices of essential commodities including edible oil could see a steep rise in wake of the Russia-Ukraine conflict, according to trade analysts.
With the oil prices breaching the USD 100 a barrel mark and settling at USD 104 as of today, India will be left with no option but to leave it to the market forces to dictate the oil prices in the coming days. Some indication suggests that a litre of petrol could rise by more than Rs 10 in the coming weeks, albeit in a staggered way.
Russia remains among the major energy-exporting nations and the sanctions against the country could have a rippling effect across the globe. Oil comprises 25 per cent of India’s total import bill and an increase in global prices will not only hit the Indian economy but threatens to widen the country’s fiscal deficit and a rise in interest rates.
For India, the effects of the crisis will go far beyond petroleum products to food items and edible oils.
Ukraine is the biggest producer of sunflower oil and India is one of its biggest importing nations, with 80 per cent of the sunflower oil requirements being met by the former. The fallout of the crisis, therefore, could trigger a major price escalation of the commodity in the market.
The import of wheat could also take a big hit as a quarter of wheat export comes from Russia and Ukraine. The war could not have come at a worse time as the covid pandemic has already impacted the supply chain worldwide.
India’s rural economy could also take a beating from the crisis in Europe because of the impending rise in prices of domestic cooking fuel and LPG. Inflationary pressure could threaten the recovery process as the country is gradually emerging out from the Covid pandemic.