Business Live: Economists warn of spike in retail inflation in April due to higher food prices

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Markets are closed today on account of Ambedkar Jayanti.

Inflation numbers released yesterday showed an easing down of retail inflation, but economists have warned about rising food prices spoiling the party pretty soon.

Meanwhile, industry leaders are hoping for the easing down of lockdown measures today to mitigate the massive economic pain caused over the last 3 weeks.

Join us as we follow the top business news through the day.

11:00 AM

China’s March crude oil imports rose 4.5% y/y on stockpiling

Chinese oil refiners are making use of cheap global crude oil prices to increase their reserve levels, so much so that the country’s oil imports have grown year-over-year despite falling demand.

Reuters reports: “China’s crude oil imports in March rose 4.5% from a year earlier, according to official customs data, as refiners stocked up on cheaper cargoes despite falling domestic fuel demand and cuts in refining rates caused by the COVID-19 disease outbreak.

China, the world’s top crude oil importer, took in 41.1 million tonnes of oil, according to the official data from the General Administration of Customs. That is equal to 9.68 million barrels per day (bpd).

The official March figure in bpd compared to an average of 10.47 million bpd for the first two months of the year. Imports in the first quarter rose 5% from a year earlier to 127.19 million tonnes, customs said, equal to 10.2 million bpd.”

10:30 AM

Gold climbs to over 7-year high on coronavirus-led economic worries

After cooling off a bit last month, gold has begun to rally due to increasing economic uncertainty linked to the coronavirus pandemic.

Reuters reports: “Gold prices rose to a more than seven-year high on Tuesday as mounting fears of a steeper global economic downturn due to the novel coronavirus increased bullion’s safe-haven appeal.

Spot gold gained 0.1% to $1,715.25 per ounce by 0037 GMT, having touched its highest since Dec. 2012 at $1,722.20 earlier in the session.

U.S. gold futures rose 0.5% to $1,770.20 an ounce.”

 

9:50 AM

‘About $250 billion lost so far, post economic shutdown’

Most businesses in non-essential products and services will have to resort to scaling down of operations in the range of 25-75% in the wake of the COVID-19 pandemic and the resultant lockdown.

Automobile, high-end consumer goods, consumer durables, fancy FMCG items, expensive clothing, gems and jewellery, leisure holidays, restaurants and star hospitality will be some of the sectors that will witness deep down compression, while essential services such as food companies, pharmaceuticals and healthcare providers will continue to do business as usual, industry experts and trade body representatives said.

The compression will lead to the loss of millions of jobs across segments in the country by the end of May, although data as of now is ‘the most fragile factor’. Businesses will embark on stringent austerity measures as reducing people and minimising the use of real estate will be critical in this regard.

Pradeep Bhargava, president, Mahratta Chamber of Commerce, Industries and Agriculture (MCCIA) said the COVID-19-driven uncertainty had resulted in erosion of income at all levels.

 

9:30 AM

Economists expect retail inflation to spike in April due to lockdown

Even as retail inflation eased in March, economists have warned that the impact of the lockdown on food prices could cause April’s retail inflation to spike.

Core inflation, however, may drop due to the severe hit to consumer demand overall.

PTI reports: “Economists on Monday termed the ease in March CPI inflation to a four-month low of 5.1 per cent as a misplaced sense of improvement because the impact of lockdown on food prices will be felt in April.

Retail inflation as measured by consumer price index (CPI) slowed to a four-month low of 5.91 per cent in March as against 6.58 per cent in February 2020 and 2.86 per cent in March 2019.

The number does give a sense of improvement in inflation, which is misplaced given that the real impact of the lockdown will be felt sharply in April as prices of food items have increased quite sharply, Care Ratings chief economist Madan Sabnavis.

With the lockdown across the country and limited movement of goods due to absence of labour, trucks and activity in wholesale markets, there have been sharp declines in supplies of foodgrains, horticulture, sugar which have been reflected in higher prices in the market.

This can push food inflation towards the 10 per cent mark. We can expect CPI inflation in April to be above 6 per cent, Sabnavis said.”



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