India Faces Rising Inflation Due to Oil Volatility, El Nino
New Delhi, August 16 - Economists predict that oil-price volatility, higher insurance costs, and strengthening El Nino effects will continue to put pressure on imported commodities and food prices in India. Sonal Badhan, Economist at Bank of Baroda, believes that the volatility in oil prices is expected to persist due to declining hopes of a peace deal between the US and Iran.
The Strait of Hormuz and Bab al-Mandeb Strait remain under threat, adding to the uncertainty. This will lead to higher costs for insurance and freight, making imported commodities more expensive. Additionally, El Nino's effects are expected to intensify in August-September, contributing to rising food inflation.
The headline WPI was 9.8% in July, with all major group heads - food, fuel, and manufactured products - contributing to the elevated inflation print. Food inflation remains a significant driver, with fruits, milk, eggs, and meat products exhibiting upward pressures.