The Russia-Ukraine war will have a “huge” impact on household expenses in India, with many consumer product companies not ruling out further price increases as more expensive crude oil has a cascading effect on consumer goods. Several companies have stated that they will wait and watch the situation created by the global crisis for any short-term escalation. Panasonic claims to be well prepared. “There are no immediate plans to announce any further price increases, but we are closely monitoring input costs for any escalation in the short term,” Manish Sharma, CEO of Panasonic India & SA, said.
Russia-Ukraine war has stoked the price of crude which is now above $100 a barrel. This will directly or indirectly impact almost all consumer facing products. India imports nearly 80 per cent of its oil needs and this price hike is directing the country towards a risk of inflation. According to the Reserve Bank of India’s analysis, every $10 rise in crude prices adds about 0.5 per cent to inflation. The Russia-Ukraine war has its first casualty impact on the price of crude oil.
As this price increase gallops with every incursion, diesel and petrol prices shoot up all over. Expect consumer prices of goods and services to rise and expect the bite to be deep. This is really “imported inflation due to war”, business and brand-strategy expert Harish Bijoor said.
ICICI Securities said that the higher crude oil prices resulting from Russia-Ukraine conflict will keep CPI inflation higher for longer, obliging the RBI to raise rates more than the two hikes that were expected in Aug-Dec’22. The geopolitical tensions are likely to further aggravate inflationary pressures with sustained rise in oil and food prices to have an adverse impact on Asia’s economies. India is likely to be among the worst losers as a result of this conflict.
