Global commodity prices, especially crude oil, natural gas and coal, have become a sore point for the markets and India Inc that is still grappling with the likely impact it will have on their bottom-line over the next few quarters. Consumers, on their part, are dealing rising fuel costs which is also fueling inflation concerns.
A recent note by Nomura suggests that if global prices of crude oil, natural gas, coal & electricity were to stay at current levels till December 2021 and rise by a modest 5 per cent till March 2022, the total potential impact on the consumer price inflation (CPI) back home will be around 1 percentage point (pp). (See table below)
“Domestic coal shortages will likely be resolved in a few months, but may lower industrial activity, while rising energy costs could accentuate inflationary pressures. The adverse terms of trade shock from higher energy prices are a headwind to medium-term growt
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