2023-08-31 00:17:05
India has banned the export of white rice, with the exception of basmati (a traditional type of Indian cuisine). Such a decision may lead to a global rise in cereal prices of up to 15%.
The estimate is from the chief economist of the International Monetary Fund (IMF), Pierre-Olivier Gourinchas. Such an impact is due to the fact that India is the largest rice exporter in the world, accounting for 40% of the cereal’s trade.
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Rice, sugar and wheat in the government’s sights
With the measure, the Indian government is trying to hold back the rise in the price of rice within the country. Food inflation in general has more than doubled since a month ago. The prices that had the most increase were those of vegetables: 214%.
Rice cultivation field | Photo: Abdul Kayum/Pixabay
In addition to these foods, other commodities also suffered a special impact from inflation. It is the result of a series of weather problems that India has been facing in recent months, such as the lack of rain.
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According to Indian government sources, the country intends to prohibit sugar mills from exporting, starting in October. India is the third largest exporter of sugar in the world, second only to Brazil and Thailand.
As for wheat, state interference will not be due to supply, but to demand: the information is that the government is considering importing nine million tons of wheat from Russia, in order to increase internal stocks, given the increase in prices practiced by national producers.
‘Export type’ inflation
These protectionist policies in India, to control the internal rise in prices, could end up “exporting” inflation to the global market, according to Alef Dias, grain and macroeconomics analyst at hEDGEpoint Global Markets.
“If that happens, central banks around the world may have to keep their interest rates high for longer than is currently expected, impacting global economic activity”, warns Dias. With the highest rates in the world, Brazil discusses rules for limiting interest.
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