New Delhi [India], May 22 : Prices of all commodities, barring precious metals, are likely to moderate in the current year, the Ministry of Finance said in its Monthly Economic Review report. However, they are still expected to remain well above pre-pandemic levels.
The Finance Ministry, quoting World Bank Commodity Outlook, April 2023, said international commodity prices started to decline from the end of the third quarter of 2022 and are estimated to decline further in 2023 compared to 2022 levels.
"The food price index is also expected to decline in 2023, driven by the reduction in "oil and meals" and "grains" prices on account of good harvest in major producing countries," the ministry's report said.
For agriculture inputs such as fertiliser, prices are predicted to be lower by 37 per cent in 2023 due to a decline in input cost and further easing of supply restriction.
Other commodities like base metals and energy prices have also been projected to decline in the wake of weakening demand conditions globally.
On inflation outlook, it said going forward, the expected bumper harvest of food grains in 2022-23 and brightened prospects for the kharif season in 2023-24 are expected to keep food inflation low in the upcoming months.
"The inflation in manufactured products, particularly "base metals", and "food products", and "fuel and power", are the major contributor to the deflation in April 2023."
Wholesale inflation, after remaining in double digits for 18 months, has now declined to a 33-month low of (-) 0.9 per cent in April 2023.
Retail inflation has also gradually declined from a peak of 7.8 per cent in April 2022 to an 18-month low of 4.7 per cent in April 2023.
"Going forward, several factors, such as weaker than expected oil supply, higher than anticipated demand from China, intensification of geo-political tension and unfavourable weather conditions, may pose an upside risk to these forecasts," the ministry's report said in a cautioning note.
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