Commodity prices led by oil moving up after 2 years. Here’s what’s happening

By: |
Updated: May 28, 2016 9:33:19 AM

Global crude prices have risen to $50 a barrel after declining to $30 a barrel in January, raising fears of higher inflation, increasing oil import bill and pressure on the fisc.

Global crude prices have risen to a barrel after declining to a barrel in January, raising fears of higher inflation, increasing oil import bill and pressure on the fisc. Global crude prices have risen to a barrel after declining to a barrel in January, raising fears of higher inflation, increasing oil import bill and pressure on the fisc.

Global crude prices have risen to $50 a barrel after declining to $30 a barrel in January, raising fears of higher inflation, increasing oil import bill and pressure on the fisc. The uptick in prices is seen in most commodities such as copper, edible oil, wheat and gold.

The decline in global commodity prices since late 2014, especially oil, gave the government a cushion to reduce oil subsidies and retail inflation remained below 5% in FY16, while it was at 9.5% in FY14. But now that can change as fuel and fertiliser subsidies could go up, trade deficit may widen and inflation may move up. The RBI Governor will keep a close watch on crude prices ahead of his credit policy on June 7 and the finance ministry may have to rework its oil subsidy math for this financial year and roll back the excise duty on oil.

In fact, the wholesale price-based inflation index returned to positive territory after being in deflation for 17 months and retail inflation rose to 5.4% in April as compared to 4.8% in March. An HSBC report points out that over the next six quarters, the divergence between output and input prices could normalise.

Gr9

Gr10

Gr11

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition