The Reserve Bank of India on Monday said global food and energy prices may stay at elevated levels and put pressure on inflation for some more time.
While resolving to bring down inflation to 5.5 per cent, RBI said inflation is a global issue, being addressed by central banks across the world.
Despite prospects of slower growth in consumption in advanced economies, international crude oil prices are expected to remain at an elevated level in view of the relatively tight demand supply-balance, RBI said.
On the food front, the supply side pressure on global prices does not appear to be abating, especially with the year-end global stock of major crops at multi-year lows.
There is, however, some improved projection, with the global wheat stock estimated to rise 15 per cent in 2008-09 to 133 million tonnes after falling around 8 per cent last year.
Similarly, global rice stocks are likely to go up 4 per cent to 82 million tonnes this year, while the sugar production is expected to be more than the consumption by around 9 million tonnes. On the flip side there is a shortage of cotton and prices may rise globally.
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RBI pointed out that the domestic inflation in all but two commodities was lower than the global level.
| WHAT'S DRIVING PRISE RISE Key commodities fuelling inflation | |||
| In per cent Products | Global* Jun-08 | Domestic** | |
| 2007-08 | 2008-09 | ||
| Rice | 139.8 | 5.6 | 8.2 |
| Wheat | 56.3 | 11.1 | 5.1 |
| Milk | - | 9.4 | 7.6 |
| Raw cotton | 27.1 | 20.7 | 31.5 |
| Oilseeds | 63-73 | 30.8 | 19.0 |
| Iron ore | 66.0 | 8.7 | 52.4 |
| Coal mining | 159.3 | 0.0 | 9.8 |
| Mineral oil | 92.9 | -3.7 | 26.7 |
| Edible oils | 50-83 | 16.1 | 17.2 |
| Oil cakes | 90.7 | 23.8 | 48.3 |
| Basic heavy inorganic chem | - | -0.7 | 38.7 |
| Basic metals, alloys& products | -5.6# | 6.2 | 22.4 |
| Basic metals, iron & steel | 69-82 | 6.8 | 35.1 |
| * Over June 2007: *'* Based on WPI as on July 12, 2008. #: Represented by IMF metals price index, which covers copper, aluminium, iron ore, tin, nickel, zinc, lead and uranium. Note: Global price increases are based on the World Bank and IMF primary commodity prices data. | |||
An assessment of key macro-economic indicators in select emerging market economies shows that consumer price inflation was in the range of 4.8-15.1 per cent during May-June 2008. The real policy rates in most countries ranged between -5.7 and 6.9 per cent in July 2008.