Commodity price rise can bump up inflation by 1%, warns Nomura

A 10 per cent increase in crude oil prices, according to Nomura's estimates, may raise India's headline inflation by around 30 basis points (bps), add around 0.3 per cent of GDP to CAD

Puneet Wadhwa New Delhi
Inflation, CPI Inflation, retail Inflation

Photo: Bloomberg

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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First Published: Oct 25 2021 | 12:21 PM IST

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