India's retail inflation, measured by the Consumer Price Index (CPI), increased to 3.48 per cent in April, up from 3.40 per cent in March, primarily due to a surge in prices of gold and silver jewellery, as well as certain kitchen staples like tomatoes and cauliflower.
The gems and jewellery industry anticipates challenging times following the government's decision to increase gold import duty to 15 per cent, a move that exporters warn could fuel the grey market and heighten smuggling risks.
Here is a list of items set to become cheaper and costlier.
Indian rupee slipping below the record 88 level against the US dollar will enhance price competitiveness of Indian products in global markets and help exporters diversify beyond the US market, say exporters. However, import-dependent sectors such as gems and jewellery, petroleum and electronics may see lower benefits due to a rise in input costs, they stated.
From labelling India the 'Tariff King' to slapping sweeping import duties, US President Donald Trump has steadily hardened his trade stance on India. These announcements are being seen as a pressure tactic to get New Delhi to agree to demands made by the US in the proposed Bilateral Trade Agreement (BTA).
Goods from sectors, including agriculture, precious stones, chemicals, pharma, medical devices, electricals, and machinery may get impacted if the US will go ahead with imposing reciprocal tariffs on Indian products, according to experts. They said that these sectors could face additional customs duties from the Trump administration because of the high tariff differential or gap, which is the difference between the import duties imposed by the US and India on a product.
Gold and silver became costlier in the country following the international price rise over the expectations of negative interest rates in the US, the rising trade tensions between the US and China and the weakening of the rupee.
Banking services, insurance premium and investment management are likely to cost more.
Many imported things became costlier as Finance Minister Arun Jaitley on Thursday hiked customs duties on these products in the Union Budget 2018-19.
While duty on products such as methyl alcohol (methanol) and acetic acid has been brought down to 2.5 per cent and 5 per cent, respectively from the existing 10 per cent.
Dining and drinking out will be expensive.
Jaitley increased the excise duty on most tobacco products by 10-15 per cent.
Precious ornaments are estimated to become 3% costlier under GST
The government has hiked gold import duty to 15 per cent from 10.75 per cent to check the current account deficit (CAD) and rising import of the yellow metal. The duty changes came into effect on June 30. Earlier, the basic customs duty on gold was 7.5 per cent, now it will be 12.5 per cent.
Gold prices are likely to rise by up to Rs 700 per 10 gram in the short term with tapered demand following the government decision to hike import duty on the precious metal, according to jewellers and analysts.
Gold in global markets, which normally sets the price trend on the domestic front, recorded a sharp gain of USD 17.50 to USD 1,738.40 an ounce and silver rose by 2.45 per cent to USD 34.27 an ounce in New York last evening.
On retirement, you will draw a lesser amount as pension.
Since the Union Budget, gold has become costlier by 8-9 per cent because of a 2.5 per cent increase in import duty to 12.5 per cent and about a 5 per cent depreciation in the rupee.
Jaitley described his three priorities as: strengthening India's firewalls by ensuring macroeconomic stability and prudent fiscal management; driving growth through domestic demand; and reforms to boost economic opportunity.
Exports of petroleum products, chemicals, pharmaceuticals, gems and jewellery, and engineering goods registered a positive growth.
Trade deficit during the month narrowed to $17.4 billion as against $12.72 billion in the same month last year
Electricity tariffs to go up as coal cess is doubled.
Computers, mobile phones, tractors and gas stoves will become cheaper with the lowering of duties proposed in the Union Budget 2004-05 while imitation jewellery, steel, cakes and pastries and scented supari will become costlier.
The options include involving jewellers as collection centres, addressing of issues that banks have been facing and using domestically available gold for giving metal loans to jewellers for domestic sales.
Consumers during the quarter sold 37.9 tonnes of old gold, which is the highest quarterly sale after September 2016, when old gold sale, or scrap supply, was 39 tonnes.
The spotlight is back on the hawala trade in diamonds.
Bullion traders said sustained buying by jewellery fabricators and retailers to meet the festive season demand mainly kept precious metal prices higher.
Aerated drinks, mineral water, travel packages, coaching classes and beauty parlour services might also cost more
Silver also shot up by Rs 400 to Rs 34,400 per kg.
Silver followed suit and recovered Rs 400 to Rs 34,100 per kg.
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Gold prices have eased off in recent months after the formation of a new government bringing in positive sentiment back to the stock market.
'There can be no dispute over the adverse impact such a policy will surely have on India's manufacturing competitiveness,' notes A K Bhattacharya.
The Budget touches a few highs and lows as far as personal finance is concerned, and one needs to be aware of them in order to optimise on one's investment plans.
The banking sector's credibility is on thin ice. Unless the government takes strict steps, things could get worse.
There will be a review of employee compensation arrangement in the light of the new rules.
