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NEW DELHI : The impact of covid-19, ongoing Russia-Ukraine war, and the energy crisis in Europe is fuelling inflation, and may aggravate over the next two-three years if global crises are not contained, Sanjiv Mehta, chief executive and managing director of packaged consumer goods firm Hindustan Unilever Ltd, and president of Federation of Indian Chambers of Commerce and Industry (Ficci), said.

Speaking at an event organized by Ficci in New Delhi on Tuesday, Mehta said inflation has been unprecedented for some time, and while it may be difficult to predict how long it would take to rein it in, businesses must plan ahead with caution.

“It’s been difficult to predict, but I think we must be ready with possibly three scenarios. One, inflation or a slight deflation will continue at a moderated pace from the elevated base of today. Two, it could go up even further. And, three, there could be a deflation in commodity prices. This is a horizon I’m looking at for the next two to three years. And, as businesses, we have to be ready for each of the three scenarios," Mehta said at the third edition of Leads 2022, a global thought leadership initiative by the industry body.

Inflation is not homegrown, but has been caused by a combination of global factors and, this time, it is impacting prices across a range of commodities and markets globally, said Mehta.

“For example, one is, of course, the disruptions which were caused by covid to the global supply chain; second was the huge amount of fiscal spending, especially, in many developed worlds. And third, of course, has been the Ukraine crisis, and consequently, the energy costs and its impact on downstream products that fuelled inflation." This has resulted in higher food prices, and the high cost of goods and services is hurting both households and businesses, he added.

India’s retail inflation, as measured by the consumer price index (CPI), has risen to 7% in August due to higher food prices, compared to 6.71% in July. Inflation can come down if the war between Russia and Ukraine is settled, he said.

In this increasingly volatile world, businesses must re-examine their role from being manufacturers of goods and services to enablers of livelihood, social equity, and strive to become custodians of conscious consumption, Mehta said.

Addressing the audience virtually, Unilever’s chief executive officer Alan Jope said the pandemic had widened income inequality globally.

Citing data from the International Monetary Fund (IMF) Jope said 120 million people have been pushed into extreme poverty as a result of the pandemic. Flagging the impact of climate change on economies, he said disruptions caused by rising temperatures will cost companies $1.3 trillion by 2026, and result in the loss of 80 million jobs.

“Now, the cost of inaction is far higher than the cost of acting. Hence, to achieve superior financial performances, there is a need to build sustainable businesses," Jope added.

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