Looks like Indians are all set to welcome the festive season under the lingering shadow of Covid-19 and a mountain of rising household bills.
Surging oil prices and the possibility of a severe coal shortage in the country – which have intensified the fear of inflation- have also complicated matters for the Reserve Bank, which will announce its next monetary policy statement on Friday.
While headline retail inflation has been easing for the past couple of months, such a steep rise in international crude prices will undoubtedly compel the RBI to step up vigilance on consumer prices.
Here’s what will pinch you most
1. Cooking Gas
Cooking gas prices have risen by Rs 15 per cylinder to record highs as crude oil crossed $83 a barrel.
LPG will now cost Rs 899.5 per cylinder in Delhi – up by 50%, in just a year following a surge in international rates of the fuel.
Rising crude oil prices have also pushed domestic petrol and diesel rates to new highs. Petrol prices rose by 30 paise and diesel by 35 paise a litre on Wednesday. In Delhi, petrol now costs Rs 102.94 per litre and diesel Rs 91.42.
State-run oil companies have warned that petrol and diesel prices may see a steeper hike in the next few days as the crude oil rally gains momentum and prices fail to correct as anticipated.
India is grappling with an escalating crisis as stockpiles of coal, the fuel used to generate about 70% of the nation’s electricity, dwindle to the lowest in years just as power demand is set to surge.
Coal-fired power stations have an average of four days worth of stock of the fuel, according to the latest data, and more than half the plants are already on alert for outages. Power Minister Raj Kumar Singh has warned that the nation could be handling a supply squeeze for as long as six months.
Power shortages are already emerging, and the gap between available electricity supply and peak demand widened to more than 4 gigawatts on Monday, according to government data from power ministry.
4. Cooking Oil
Prices of cooking oils in the domestic market are ruling at high level. Retail edible oil prices in the country have increased in the range of 41 to 50 per cent in the last one year.
The central government has already reduced import duties on crude and refined edible oils, including palm oil, to bring down retail prices.
Some of India’s biggest FMCG companies have also flagged rising product prices due to high input, commodity and fuel costs as their biggest concern ahead of the upcoming festive season.
Companies like HUL, Nestle, Britannia, PepsiCo and Dabur have already raised prices of soaps, detergents, toothpaste etc. Freight and packaging materials costs have also surged.
Industry experts fear this could dampen demand just when the economy is recovering from the devastating second wave of the pandemic.