Indian consumers are bracing for more frequent rise in petrol and diesel prices even though rice and wheat prices may remain low.
A World Bank report projects a 26% rise in energy prices and a 3% decline in grain prices in 2017.
Latest government data show the prices of cereals--wheat, rice, jowar, bajra and other coarse grains--was up 5.38% in 2016-17, while fuel and electricity prices were up 5.56%
A normal monsoon may soften the domestic food prices further. In the global arena,
Indian fuel prices are directly linked to the global prices while food grain prices are controlled by the government through the minimum support prices (MSP) and local wholesale markets or mandis.
“Crude oil prices are forecast to rise to an average of $55 per barrel (bbl) in 2017 from $43 per barrel in 2016,” the World Bank said in its Commodity Markets Outlook report.
The oil forecast reflects balancing forces--an upward pressure on prices from production cuts agreed by Organization of Petroleum Exporting Countries (OPEC) and non-OPEC producing countries, and downward pressure from persistently high stocks, supported by the faster-than-expected rebound of the United States shale oil industry.
India, which revises petrol and diesel prices in line with global prices, is now thinking of daily revisions.
Metals prices are projected to increase 16% as a result of strong demand in China and various supply constraints, the World Bank said.
However, agricultural commodity prices, which gained 1% in the first quarter, are anticipated to remain broadly stable in 2017.
Stockpiles of corn and wheat are at record highs globally after years of bumper crops.
Global stocks of corn, wheat, rice and soybeans combined will hit a record 671.1 million tonne going into the next harvest, the third straight year of historically high surplus, the US Department of Agriculture (USDA) forecast.