The entire country is troubled by the heatwave. This problem is going to increase even more. Economists say that due to increase in heat, agricultural production may be adversely affected. If this happens then we may see an increase in the inflation rate of the country. According to experts, due to heat wave the inflation rate in the country may increase by 0.30 to 0.50 percent. According to experts, the prices of vegetables are already increasing. Inflation is likely to remain high till June. Something resembling a normal monsoon may be seen. Let us also tell you what the country’s economists have to say about this.
Possibility of increase in prices of vegetables
Radhika Rao, executive director and senior economist at DBS Group, said that the impact of the heatwave will be most visible on perishable food varieties, especially vegetables. Inflation of vegetables works to increase overall inflation. Food inflation continues to remain high in the financial year 2024. Rao said that the speed of inflation of vegetables is 50-100 percent more than the speed of seasonal inflation, so the overall inflation may increase by 0.30 to 0.50 percent.
Inflation on vegetables may remain at 28 percent
CareAge Chief Economist Rajni Sinha said that the impact of heatwave can be seen on agricultural income, food inflation and general health condition. Where consumer inflation had come down to a 10-month low of 4.9 percent in March. Whereas food inflation was at the highest level of 8.5 percent. The special thing is that vegetables contributed 28 percent of food inflation. Inflation of vegetables has been in double digits for five consecutive months.
Experts believe that in the current quarter also its average growth is likely to be around 28 percent. According to experts, the inflation of not only vegetables but also fruits may increase. Sinha said that due to the heatwave, the yield and shelf life of perishable products like vegetables and fruits will be affected and the supply will be reduced. Due to which there will be an increase in the prices of vegetables and fruits. The weight of fruits and vegetables in the total inflation basket is 8.9 percent.
Impact on Kharif season
Piramal Group Chief Economist Debopam Chaudhary said that the logistics issue due to extreme heat also contributes to increasing low inflation to a great extent. Also, if the monsoon is less than normal then the heat can affect the Kharif season also. Due to this heatwave and the possibility of a below normal monsoon, the level of the reservoirs is likely to decline further.
Will EMI be reduced?
If overall inflation increases then it may become very difficult for RBI. The Reserve Bank may postpone the cut in interest rates. According to some experts, the way inflation is in the country, it seems that there is no possibility of cutting interest rates in the current financial year. However, some people say that interest rates can be cut in the cycle of October or December. To reduce inflation, RBI had increased interest rates by 2.50 percent from May 2022 to February 2023. Since then RBI has not made any changes.
