Expect your household budget to go up sharply as prices of essential items shoot up

• The inflation crisis in the country may get worse because of a shortage of supply from countries like Russia, Ukraine which are among the largest producers of sunflower oil, metals, and wheat to India.
• Individual transportation costs may also increase as petrol and fuel prices might go up after state elections conclude next week.
• Prices of milk and other consumer goods products have risen in recent months.

From HUL, Marico, Britannia, Nestle everyone has been out and loud since the last three months about the soaring inflation that has led to constant increases in prices of household commodities like biscuits, soaps, shampoo, oil and so on.

Sadly, the situation is turning out to be worse as prices of almost everything are going up because of high input costs, which usually includes fuel prices, liquified petroleum gas (LPG) and so on.

In fact, your household budget may only go up for the next few months. This is because the country would struggle to get enough supply of commodities due to a full-blown war between the two of the biggest producers of these commodities. So naturally, less supply and high demand is likely to increase the price of such products.

Prices of sunflower oil, wheat, LPG, crude oil are directly impacted due to the ongoing battle between Russia and Ukraine. As a result, raw material costs have also increased for companies producing FMCG products.

Let’s look at the products whose rise in price will impact your household budget:

Cooking oil

Prices of cooking oil commodities across nations have shot up because of supply disruption fears in Russia and Ukraine. As a matter of fact, Ukraine and Russia together account for 90% of India’s sunflower oil imports.

Sunflower oil is one of the most popular edible oils consumed in India, alongside palm, soya and other alternatives. In fact, sunflower oil is the second most imported edible oil, next to only palm oil.

The government has acknowledged the impact on the country's imports due to the geopolitical conflicts. “We are fairly seized of the matter in its granular form because it is going to have an impact on the essentials such as edible oils which come from Ukraine, sunflower oil and parts of fertilizers and so on,” finance minister Nirmala Sitharaman reportedly said.

In 2021, India imported 70% of its sunflower oil requirements from Ukraine alone. Russia accounted for 20% and the balance 10% was from Argentina.

Milk

Due to the rise in input costs -- energy, packaging, logistics and cattle feed, the cost of milk has also gone up. Dairy companies like Amul, Parag, Verka have raised milk prices by ₹2 citing the rise in input costs.

According to the data by Statista, India consumes approximately 83 million tonnes of milk every year, which makes it one of the most consumed items in the country.

Gas prices

The rising inflation will burn a deeper hole in the pockets of consumers as the prices of LPG also rises.

India fullfils over half of its gas needs with imports of liquified natural gas (LNG) from Ukraine. A small part of India’s LNG consumption is also met through imports from Russia.

Fuel

Prices of petrol and fuel will also move up after the state elections end next week as crude oil prices have been above $100 per barrel. A regular revision in petrol, diesel and cooking gas LPG were halted in five states including Uttar Pradesh due to ongoing assembly elections.

"With state elections getting over next week, we expect daily fuel price hikes to restart across both gasoline and diesel," JP Morgan reportedly said in a report.

Crude oil prices have surged significantly by 43% so far this year mostly because of fear of oil disruption from one of the biggest oil producers, Russia, after it invaded Ukraine.

Wheat

Cost of a very essential Indian commodity – wheat – has gone up across the world. Russia is the largest exporter of wheat and Ukraine is among the four biggest exporters of the commodity, as per a JP Morgan report.

However, this might give India an opportunity to export more wheat in the global and domestic markets.

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