It seems inflation will not go down this year

It seems inflation will not go down this year

/ Guest Column / Wednesday, 12 January 2022 16:56

The corona virus and the pandemic not only increased health problems the world over, inflation also increased tremendously in about 150 countries of the world. This is a problem not only in India, but the whole world is suffering from the price rise of consumer goods and food items. Strong chances are there that the inflation will come under control gradually in a year’s time or more. Shortage of raw materials, disruption of supply chains, reduced production of necessary parts and climate change affecting agricultural production made everything from food to daily use items costlier. Due to the outbreak of Omicron, the situation is expected to remain like this till April. Even after this, it may take nine to twelve months to fully control inflation. This year a variety of electric vehicles will come in the market. Many changes will be seen in this regard. Companies will also have to reduce the prices of their e-vehicles. Gradually people will start getting disillusioned with petrol and diesel powered vehicles and the number of electric vehicles will increase on the roads. The shortage of chips (semiconductors) not only hindered the manufacture of cars, but also had a huge impact on the electronics industry.
Companies making electronics and consumer goods faced many other problems too during the Covid era, such as increase in the prices of raw materials like steel and copper, problems in shipping and increase in sea freight, slow movement of cargo at ports and uncertain future arising out of increased transportation cost and labour shortage. Industry people point out that the cost of electronics manufacturing companies has gone up by 20 per cent, while the prices have increased only marginally. It was the festive season from Diwali to Christmas and New Year, so the electronics firms did not increase the prices of their consumer items even after taking low margins. But that would not continue for long. Therefore, there is a high possibility that electronics goods companies like Godrej, LG, Hitachi and Panasonic may increase the prices of their products by 6 to 7 percent in the coming weeks.
Inflation has increased worldwide. During the lockdown, the production of many things decreased, but after the lockdown was lifted, the demand for all the things suddenly increased in the market. That is the reason why inflation went up all of a sudden. For example, in many countries there is a shortage of workers. For this reason, there is not enough production of palm oil in Malaysia. Prices of soap, oil, shampoo, biscuits, cosmetics, namkeen etc went up due to increase in palm oil rates. The increase in the price of crude oil has increased the cost of freight and delivery. Due to this, the prices of chemical fertilisers, paints, rubber and synthetic yarn etc. have gone up. Transportation of goods by sea has become expensive. Due to labour shortage in China, industrial metals like brass, copper, steel, nickel and cobalt have become expensive. This has affected the prices of products like television sets, refrigerators, ACs, washing machines etc. Climate change has affected the supply of agricultural products in many countries, such as the sugarcane crop in Brazil for the same reason. As a result, the price of sugar increased.

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