Conflict in Ukraine pushes up the price of basic necessities, Indians “tighten their belts”

This fact is significantly threatening the recovery of Indiaa consumption-based economy, after two years of fighting COVID-19.

Consumers in Asia’s third-largest economy are feeling the pinch as companies are faced with rising costs, especially in the wake of the pandemic. petrol price increase and diesel oil, as well as vegetable oil first in five months this week.

Background Indian economy growth was slower than expected in the October-December 2021 quarter. And economists predict that the current growth will continue to decline as high fuel prices lead to soaring inflation.

Private consumption contributes the largest share of India’s gross domestic product at nearly 60%. However, since Russia’s special military operation in Ukraine diieesn launched at the end of February 2022, Indian companies have raised the prices of milk, instant noodles, chicken and other key commodities from 5% up to 20%.

About 800 million out of a population of nearly 1.4 billion have been provided with free essential foods by the Indian government during the pandemic, and even a small price increase today can affect the budget. their books.

Pronab Sen, formerly India’s chief statistician, warned that family finances could fall for the third year in a row.

“The process of rebuilding savings has only just begun after the pandemic,” he added. “Because of this latest shock, they will have to cut their consumption.”

Rising global crude prices have prompted companies in the import-dependent country to raise retail prices of gasoline and diesel twice this week. India imports 85% of its crude oil, and prices are up nearly 50% this year.

This South Asian country is also the world’s largest importer of cooking oil, imported cooking oil accounts for nearly 60% of the country’s demand.

Rising world crude oil prices prompted companies in India to raise retail prices of petrol and diesel twice this week. (Photo by Reuters)

However, the price of palm oil, the most consumed cooking oil in the country, has risen 45 percent this year. And supplies of sunflower oil, which Ukraine and Russia produce in large quantities, have been disrupted. Some wholesalers say their cooking oil sales have fallen by a quarter in the past month due to rising prices.

These factors sent India’s retail inflation rate in February above the Central Bank of India’s level by 6% for the second consecutive month, while the wholesale rate was more than 13%.

The Federation of Indian Traders estimates that the input costs of manufacturers of consumer goods and fast-moving consumer goods (FMCG) will increase by 10% to 15% this month as fuel prices rise, and This increased cost will be borne by the end consumer.

India’s Mother Dairy and Amul have raised milk prices by nearly 5% this month, while FMCG companies such as Hindustan Unilever and Nestle are charging more for items such as instant noodles, tea and coffee.

Broiler chicken prices jumped nearly 45% in six months to a record 145 Rupees/kg ($1.90) this week as feed ingredients corn and soybean meal became more expensive after supplies from affected Black Sea area.

Fertilizer prices have risen to a record $150 a tonne since Russia, one of the biggest producers, brought weapons and troops into Ukraine.

Archana Pawar, a housewife in the financial capital Mumbai, said:Managing our monthly budget has become very difficult. This kind of price increase is forcing us to cut back on consumption“.

* Invite readers to watch programs broadcast by Vietnam Television on TV Online and VTVGo!