India's heaven, Kashmir, has been facing nature's wrath again this year. As you may be aware, life is affected to a great extent there. The other parts of the country too aren't spared. The unseasonal rainfall across the central and western parts of the country have inflicted havoc on farmlands and also left the weatherman puzzled. In March this year, 62.5 millimetres of rainfall were recorded, almost 100% more than normal (32.1 millimetres) and the highest in the past 100 years (in 1915, it was 78 millimetres). The data sourced from private weather forecasting agency Skymet show between February-end and March-end, excess rains were recorded in four of the five weeks.

What unseasonal rain means to you?
Well, with the unseasonal rainfall you may have to shell out more on food articles. In fact over the last few weeks prices of fruits and vegetable have gone up on account of the impact on agricultural produce. Green and leafy vegetables have become dearer. Likewise with damage to crops such as wheat, chana, soybean, jeera, grapes and mango crops; hereto there's an escalation is seen. Wheat production is likely to go down by 10% to 20% this year - which is a negative for agro-dependent economy like India.
 

Inflation in Vegetables Vs. CPI Inflation

Note: The data points above are from the Consumer Price Index
(Source: MOSPI, PersonalFN Research)  

As per the official data, vegetables have seen a steep inflationary trend over past few months. As indicated by Consumer Price Index (CPI), vegetable prices have gone up by 13.01% in February 2015 (on Year-on-Year basis). A rise of 9.0% in January 2015 was witnessed as well (Y-o-Y basis). Although inflation for the category of fruits was not as sharp as that in the category of vegetables in January and February this year, it threatens to cross 10% mark again, given that unseasonal rains have negatively affected, production of fruits.

So if you are an agriculturist / farmer these are challenging times and so is it for consumers with a detrimental impact left on household budgets. So now if you are out for grub, don't be surprised if you have to dole out a higher amount exclusive of the taxes; because it would be smartly passed on to you. If occurrences of rainfall perpetuate in April as well, there are chances that the onset of southwest monsoon would be delayed as well, as assessed by experts in the domain.

PersonalFN is of the view that, taking cognisance of the above, RBI too is unlikely to reduce policy rates in it 1st bi-monthly monetary policy statement 2015-16 (scheduled on April 7, 2015), but may cut SLR by another 25 basis points (bps) as a measure to infuse primary liquidity in the system. RBI would be watchful of inflationary trends.

PersonalFN is of the view that during such challenging times it imperative that you effectively manage your household budget. This will not only help you save but even plan for emergencies and meet the financial goals you have envisaged.

Add Comments