Fuel Price, Food, Inflation: How Will Russia-Ukraine War Impact Indian Economy | Explained

The Russia-Ukraine crisis could impact the food prices in India. Experts opine that the sharp jump in crude oil prices will pose inflationary, fiscal risks to the economy.

Russia-Ukraine War Latest Update: Russian President Vladimir Putin on Thursday morning announced military operation in Ukraine and warned other countries that any attempt to interfere with the Russian action would lead to consequences you have never seen. Giving details, he said the attack was needed to protect civilians in eastern Ukraine. Soon after Putin finished speaking, big explosions were heard in Kyiv, Kharkiv, Odessa and other cities across Ukraine. Moreover, foreign minister Dmytro Kuleba said Russia has launched a full-scale invasion of Ukraine and is targeting cities with weapons strikes.

In the wake of these latest developments in Ukraine, the stock market across the world crashed after Putin’s warning of invading Ukraine’s border. Sensex went down around 2,000 points during the early trade on Thursday. On the other hand, Nifty also dropped over 570 points to below 16,500-mark on February 24. Brent crude oil prices also have hit $100-per-barrel-mark for the first time since 2004. Not just that, the gold prices in the domestic market also crossed Rs 51,400, highest in the last few months. The increasing crisis between Russia and Ukraine has made a massive impact on the global economy at the moment.

At this time, the Indian household is likely to bear the brunt of escalating Russia-Ukraine crisis. Tension in the European region is likely to drive commodity and food prices higher.

Fuel price may increase: Even though the petrol and diesel prices in India remained stagnant since November 4, 2021. To bring relief to the middle class, the Central government recently cut the excise duty on petrol and diesel by Rs 5 and Rs 10, respectively in November last year. After Centre’s move, several states announced to cut the value added tax (VAT) on fuel prices.

As the Brent crude oil price climbing to record high, oil marketing companies are likely to revise the fuel prices soon. Experts dealing with the matter believe that petrol and diesel prices will witness a sharp jump in early March, once the state assembly elections end.

Food prices likely to increase too: The Russia-Ukraine crisis could impact the food prices in India. Experts opine that the sharp jump in crude oil prices will pose inflationary, fiscal risks to the economy. Moreover, the rise in crude oil prices is also expected to affect the subsidy on LPG and kerosene. The crude oil price hike will increase the transportation costs and it will subsequently impact costs of food.

Experts believe that the crisis in Ukraine and Russia will impact crop production such as wheat and movement across the world. The palm oil and soy oil price could also get affected.