Limited Impact of Global Energy Prices on India's Inflation Amid West Asia Conflict
Fuel shock has mild impact on India's inflation, pressures may rise if West Asia conflict persists: Crisil
The Economic TimesImage: The Economic Times
A report from Crisil Intelligence indicates that despite a significant rise in global energy prices due to the ongoing conflict in West Asia, India's retail inflation has only seen a mild increase. The Consumer Price Index-based inflation rose to 3.4% in March, aided by government measures that cushioned consumers from price shocks.
- 01India's retail inflation increased to 3.4% in March, up from 3.2% in February.
- 02Global Brent crude prices surged by 45% and natural gas prices by 69% in March.
- 03Government measures, including excise duty cuts, helped stabilize retail fuel prices.
- 04Crisil forecasts inflation could average 4.5% in fiscal 2027, potentially rising to 4.7% if energy prices remain high.
- 05Weather-related risks and geopolitical tensions present ongoing challenges to inflation stability.
Advertisement
In-Article Ad
According to a report by Crisil Intelligence, India's retail inflation has shown a limited response to the sharp rise in global energy prices caused by the ongoing conflict in West Asia. The Consumer Price Index (CPI)-based inflation increased to 3.4% in March, up from 3.2% in February, primarily due to rising food and fuel prices. Despite Brent crude prices rising by 45% and international natural gas prices by 69% in March, the overall impact on domestic inflation has been muted, thanks to government interventions such as excise duty cuts and stable retail fuel prices. Core inflation remained steady at 3.7%, indicating that second-round effects from higher energy prices have yet to be felt. Looking ahead, Crisil projects inflation to average 4.5% in fiscal 2027, with potential increases if the geopolitical situation persists. Additionally, weather conditions, particularly a projected below-normal southwest monsoon, could further complicate food inflation, as agricultural output may be affected by adverse weather. The report highlights that while certain food items have seen inflation rise, others like cereals and pulses have experienced deflation, contributing to a mixed inflation trend overall.
Advertisement
In-Article Ad
The limited impact of rising global energy prices means that consumers in India are currently shielded from significant price increases, but ongoing geopolitical tensions and potential weather disruptions could change this scenario.
Advertisement
In-Article Ad
Reader Poll
How concerned are you about rising inflation in India due to global energy prices?
Connecting to poll...
Read the original article
Visit the source for the complete story.

