Following the recent decision of India to ban wheat exports;

Arnab Nath, Economist at GlobalData, a leading data and analytics company, offers his view:

“India’s decision to ban wheat exports may slow down the sharp rise in domestic prices of wheat but may not decline due to supply side constrains as the crops were damaged by the extreme heat wave across the country. Against this backdrop, GlobalData forecasts the consumer price inflation rate in India to be 6.04% in 2022 against 5.14% in 2021.

“GlobalData has revised its 2022 inflation rate forecast for India upward by 0.8 percentage points in May 2022 as compared to its previous projection in February 2022 amid the rising prices of foods and transport.

“Supply side constrains and the consequent rise in food and fuel prices drove the wholesale price inflation to 17 years high of 15.08% in April 2022. The higher prices are being passed on to the consumers, which is driving the prices of final goods. Consumer food prices in India exhibited an upward trend since September 2021 onwards. Consumer food inflation rate increased by 2.98 percentage points in last eight months to reach 10 months high of 4.59% in April 2022. The overall consumer price inflation rate increased to 7.79% in April 2022, the highest since June 2014.

“The elevated inflation level is unlikely to correct anytime soon, and GlobalData expects the Reserve Bank of India to tighten the money supply in the economy. Meanwhile, following the supply side disruption caused by the Russia-Ukraine crisis, India’s ban on wheat exports is a further blow to the world food market. GlobalData projects the world inflation rate to rise to 6.72% in 2022, an upward revision from the 4.97% projected in February 2022 and an increase from 3.5% in 2021.”