Menu
BW CFO World
Community for Finance Professionals, Consultants and allied businesses
  • Home
  • News
  • Videos
  • Articles
    • Credit & Capital
    • Economic Trends
    • Financial Compliance
    • Financial Leadership
    • Financial Management
    • Financial Reporting
    • Financial Strategy
    • Risk Management
    • Taxation
  • Featured
  • Nominate for Awards
Close Menu
20211223_142858
October 13, 2022

Unseasonal Rains Can Impact Inflation Trajectory: SBI

Urvi Srivastava Financial Reporting food prices, inflation, SBI

In 2019, unseasonal rains that were much lower in proportion had pushed food prices up firmly by 3 per cent over the 4 months that ended January 2020, according to the report

The State Bank of India (SBI) in a report on Wednesday said that unseasonal rains can play a large role in impacting the inflation trajectory and the terminal repo rate might go higher than 6.5 per cent as the fed rate hike is now at 125 bps in 2022. 

The consumer price index (CPI) inflation for September jumped to 7.41 per cent. A decomposition of CPI food inflation into sub-components shows that on a weighted contribution basis, the food inflation was driven by cereal products and vegetables. The seasonal impact of rains on vegetable prices will now become discernible. 

“Going forward, the unseasonal rains in different parts of the country up to 700 per cent in cereal-producing states could have a significantly large impact on cereal and vegetable prices,” the report stated. 

In 2019, unseasonal rains that were much lower in proportion had pushed food prices up firmly by 3 per cent over the 4 months that ended January 2020. However, food inflation cooled soon after with vegetable prices significantly declining by March 2020, it mentioned.

The problem, however, continued with cereal prices at high levels as such prices are sticky downwards and takes time to mean revert, as per the report.

“Due to unseasonal rain patterns and frequency being witnessed across major states now, the surge in food inflation may led to inflation for December hover above 7 per cent and the quarterly average should come around 7 per cent, above RBI’s projection (6.5 per cent),” the bank said.

Also, the bank estimated that the terminal repo rate in the current cycle could now might extend till Febuary 2022, with a 50 bps rate hike penciled in December policy. 

“The only solace could be a lower crude price and the negative growth in protein rich item eggs and steady deceleration in prices of meat and fish. We are now looking at the terminal repo rate going higher than 6.5 per cent,” it added.

Meanwhile, the capacity utilisation of manufacturing companies after reaching high of 75.3 per cent in Q4FY22 had declined to 72.4 per cent, as per the latest RBI OBICUS survey. 

However, growth in bank credit was seen across all major sectors with 16.4 per cent growth as per the latest number as of 23 September 2022. 

Apart from personal loan, it seems corporate working capital utilisation is continuing to be robust and driving the credit offtake.

Urvi Shrivastav

→ Urvi Shrivastav

OPEC Trims Oil Demand Growth For 2022, 2023 Industrial Growth Shrinks 0.8% In August

Related Posts

economy

Financial Reporting

Economy Remains Steady In Recent Months: PHD Chamber

20220714_125227

Financial Reporting

Infosys Reports Strong Growth In Q3, Revenues Jump To Rs 38,318 Cr

20211201_100953-1

Financial Reporting

Tech Mahindra, Microsoft Collaborate To Deliver Cloud-powered 5G Core Network Modernisation For Telcos

Movements

  • zUah2lDb_400x400Deloitte India Named Romal Shetty As CEO For Four-Year Term
  • cfo imageVishnuhari Pareek Named As Head Of Finance At Arkam Ventures
  • thumbnail_Sidharth1Siddharth Sehgal Is New CFO Of BeatO
  • Business men giving a handshake. Business conceptRamamurthy Becomes MD, CEO of BSE, SEBI approves appointment
  • 1554629557880Arvind Agarwal Resigns Nykaa, Joins PayU India As CFO

Selected Stories

  • economyEconomy Remains Steady In Recent Months: PHD Chamber

    Read more

  • 20220714_125227Infosys Reports Strong Growth In Q3, Revenues Jump To Rs 38,318 Cr

    Read more

  • 20211201_100953-1Tech Mahindra, Microsoft Collaborate To Deliver Cloud-powered 5G Core Network Modernisation For Telcos

    Read more

  • oil and pulsesIndia Likely To Halt Duty-free Soybean Oil Imports From April 2023

    Read more

  • Business men giving a handshake. Business conceptHindustan Unilever Acquires 51% Stakes In Zywie Ventures, Makes A Foray Into Wellness Market

    Read more

Categories

  • Accounting
  • CFO Stance
  • Credit & Capital
  • Economic Trends
  • Featured
  • Financial Compliance
  • Financial Leadership
  • Financial Management
  • Financial Reporting
  • Financial Strategy
  • Financial Technologies
  • Global News
  • Interview
  • Movements
  • Risk Management
  • Taxation

Recent Comments

    Back To Top
    BW CFO World
    • Home
    • News
    • Videos
    • Articles
      • Credit & Capital
      • Economic Trends
      • Financial Compliance
      • Financial Leadership
      • Financial Management
      • Financial Reporting
      • Financial Strategy
      • Risk Management
      • Taxation
    • Featured
    • Nominate for Awards
    © Copyright BW BUSINESSWORLD 2018. All Rights Reserved.