Amidst War, Inflation Marches On!

Inflation levels are gathering pace across the world and India is no exception to this raging phenomenon. Will the commodities sector, which is considered one of the best sectors to hedge against inflation, remain an investor favourite? Armaan Madhani elucidates how the inability to export essential commodities from Russia exhibits a golden opportunity for major Indian commodity players to fill the gap

- Armaan Madhani

Inflation is inevitable. It is ubiquitous and can occur in almost any product or service. But inflation isn’t always a problem. A moderate amount of inflation is viewed as positive and considered to be a sign of a healthy economy. It helps boost consumer demand and foster economic growth. However, too much of anything is bad. Once inflation increases to become prevalent throughout an economy, the expectation of further inflation becomes an overriding concern in the consciousness of consumers and businesses alike.

As economies around the world continue to make strides towards a state of full recovery from the damaging effects of the pandemic, intensifying inflationary pressure is the common conundrum that looms over central banks at large. A few months ago, this increased inflation was being referred to as transitory, a temporary problem expected to fade away sooner or later. However, the ceaseless rise in prices continues to put a damper on growth prospects. The International Monetary Fund (IMF) in its recent published World Economic Outlook stated, “Elevated inflation is expected to persist for longer than envisioned earlier. Rising energy prices and supply disruptions have resulted in higher and more broad-based inflation than anticipated, notably in the United States and many emerging market and developing economies.”