All commodities likely to become cheaper in 2023: Finance Ministry
What's the story
The prices of all commodities, except precious metals, are expected to see a drop in 2023, the Finance Ministry said in the April edition of its Monthly Economic Review. Although the prices are likely to moderate, they will remain above pre-pandemic levels. The report said that the prospects for the agriculture, manufacturing, and services sectors looked bright as rural demand saw an uptick.
Context
Why does this story matter?
India faced sluggish growth coupled with high inflation as it recovered from the COVID-19 pandemic and previous blows to the economy amid a global financial crisis. In April last year, retail inflation was at a peak of 7.8%, while wholesale inflation stood at 15.38%. Buoyed by sustainable growth, the figures are currently at 4.7% and -0.9%, respectively.
Twitter Post
Ministry report cites World Bank's Commodity Market Outlook, April 2023
The Commodity Markets Outlook 2023 shows that food prices in real terms remain at one of the highest levels of the past 5 decades.
— World Bank (@WorldBank) May 21, 2023
Read the #CMO2023
➡️ https://t.co/BRk0mn7RuV pic.twitter.com/QvC7RCZwjz
Decline
Prices of food grains, fertilizers, energy to fall
The fall in prices of oil, meals, and grains due to a good yield in major producing countries is expected to bring down the food price index. Regarding agriculture inputs, the price of fertilizers could drop by 37% as supply restrictions have eased and input costs have declined. The prices of energy and base metals could also fall due to globally weakening demand.
Information
Report 'warns' of upside risk
The report also talked about several factors that may pose upside risks to these predictions, such as a weaker-than-expected oil supply, higher-than-anticipated demand from China, escalation of geopolitical tensions, and unfavorable weather conditions. In investment parlance, an upside risk is the uncertain possibility of gains.