Commodity prices-- On their way up

Yes- the inflation pressures are getting bigger and bigger. Today while I was watching ET Now in the morning I got to understand that Iron ore prices are expected to increase by another 33% In April. The iron ore companies have already informed their customer on this.

SO- what this does this to ensure that costs for steel companies goes up-- and guess what- Steel prices are going to be going Northwards. Steel companies will have to pass on the costs on to its customers.

Steel is the basic commodity for all of our infrastructure needs and impacts so many sectors across the economy.

Real estate sector: Already in the doldrums because of the recession will have a direct negative impact on their margins or they will need to increase their sale prices

Automotives: Yes-- cars will become expensive-- especially the impact on small and medium cars, and two wheelers-- people who buy the mid size segments and luxury segments will not mind paying a little more.

Infrastructure companies: A critical component-- steel prices increases will impact the amount that needs to be invested in increasing infrastructure-- More investment, Lower margins

White Goods: LG, samsung, Onida, Videocon-- all will have an -ve impact

Slowly but surely, we are heading towards higher inflation for some time to come.

Read more on inflation -- the driving forces in my previous post here

Start preparing and inducting higher inflation numbers in all your financial planning-- a 5-6% Rate doesnt seem to be something possible for some time to come.

Keep investing!

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