Dear Readers,

After the announcement of Ceasefire, let's look into the prospective of the after war situations around the globe.

Fluctuations in global crude oil prices serve as a pivotal factor driving the rise in local living costs. Here, for instance, the price of a takeaway meal at a restaurant has risen by at least ₹15, while the portion size has simultaneously shrunk; furthermore, instead of the traditional fried lentil papadums, customers are now often served potato chips. These are but a few minor examples; the price of a tender coconut has jumped from ₹50 to ₹70, and a cup of tea has gone from ₹10 to ₹15.

As long as the political situations in the middle east prevails and the long time to take the fix up and maintenance of the oil production and regularities in its global supply chain the problem will be there definitely.

Since countries like India fulfill a significant portion of their fuel requirements through imports, any rise in global crude oil prices is directly reflected in the domestic prices of petrol and diesel.

As transportation costs escalate, the prices of everything—ranging from vegetables to other essential commodities—automatically rise in tandem.
Apart from this, shortages of raw materials within the manufacturing sector, coupled with global supply chain disruptions, constitute other major factors contributing to this inflationary trend.

In particular, shortages of semiconductors and other technological components have driven up the prices of electronic devices and automobiles.
Inflation operates much like a chain reaction. While rising fuel prices exert pressure from one side, fluctuations in international currency exchange rates simultaneously drive up the costs of imported goods from the other.

The major would be the price escalation of food products, essential commodities would trigger the price of everything.

Consequently, the current rise in living costs is not merely an issue confined to a single nation or a specific wartime scenario; rather, it is best understood as a complex interplay of multi-layered impacts stemming from both global economic dynamics and natural environmental factors. This economic cycle exerts a significant impact on the daily budgets of ordinary people.

Prices do not decline as rapidly as they rise; there are several robust economic reasons underlying this phenomenon.

Economists refer to this concept as "Sticky Prices." When the price of a commodity increases, associated costs—such as labor wages, transportation expenses, and rent—also tend to rise.

In practical terms, it is nearly impossible to subsequently reduce wages or rent once they have been increased.

Consequently, since production costs become permanently elevated, the prices of goods do not revert to their previous levels.

On the other hand, the depreciation of the currency's value constitutes a major contributing factor. A product that costs one hundred rupees today might have been purchasable for fifty rupees just a few years ago.

The reality here is not that the intrinsic value of the product has increased, but rather that the purchasing power of the currency has diminished.
Governments and central banks generally prefer a moderate level of inflation. This is because if prices were to fall (deflation), consumers would postpone their purchases—waiting in anticipation that prices would drop even further.

Such behavior would adversely affect business activity, trigger unemployment, and ultimately cripple the entire economy.

Therefore, the fact that prices do not decline is considered a catalyst that keeps the economic engine running.

One more thing is the mentality of the customer itself. As long as the customer/consumer make it a habit to buy an increased price for a productive and they used to do it, there will be no point to reduce the price by the production houses.

Even if prices initially rise due to temporary factors—such as fluctuations in crude oil costs—and the prices of those raw materials subsequently decline, companies tend to retain the resulting profit for themselves rather than passing the savings on to the consumers. These induce all the people around the world would be pushed for a new normal which makes them to return to their previous levels a rare occurrence. 

Let's look forward to this and to adjust the same in our trading/investment patterns!