Not only the common people but also the corporate world is worried due to inflation, the profit has decreased.

Since last year, the whole world is troubled by the high rates of inflation. Inflation is not only affecting the common people, but the Indian corporate world (India Inc) is also getting affected by it. According to a report by domestic rating agency ICRA, India Inc’s profits have come down due to high inflation.

year-on-year decline

According to the ICRA report, India Inc’s Operating Profit Margin declined by 2.37 per cent to 16.3 per cent during the December quarter. The reason for this decrease on annual basis was inflation and increased cost of fuel and electricity. However, there has been some improvement in the situation on a quarter to quarter basis.

Improvement compared to September quarter

According to ICRA, the operating profit margin has increased by 1.80 per cent compared to the September quarter. ICRA says that various companies increased the prices at the end of the year. Apart from this, the rate of inflation also came down relatively in the last months of the year. These are the reasons for the improvement in the December quarter as compared to the September quarter.

Their impact will go ahead

The rating agency said that in the coming times, a short-term increase in prices and a gradual reduction in input costs can help in increasing profits. However, risks remain in the long term due to geopolitical tensions, threat of economic slowdown, volatility in foreign exchange rates etc.

Incra’s sector head Shruti Thomas said, India Inc’s ability to earn profits will be affected by many challenges. These include energy cost inflation, the growing threat of recession in developed countries, and the impact of fluctuating foreign exchange rates on both import and export-oriented sectors.

Inflation troubled like this

Let us tell you that the inflation rates in the country have been troubling for more than a year. Last year, during the first 10 months, the inflation rate was more than 6 percent. Later, during two months i.e. November and December, there was some softening in it, but in January 2023, the inflation rate once again went out of the purview of the Reserve Bank. To control this, the Reserve Bank has increased the repo rate in several phases since May last year, but till now inflation has not been controlled.