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Rising in Oil prices adds a new risk to surging inflation in India

Rising in Oil prices adds a new risk to surging inflation in India


Oil prices rise above $70 a barrel last week for the first time since September. This rising price of oil adds a new risk to already surging inflation in India.

Oil threat looms for India, adds a new risk!!

In India, the world’s third biggest oil importer, cost of every commodity starting from food to medicine and mobile phone services has been already on a high climb.

According to the median estimate of 36 economists surveyed by Bloomberg, Data will probably show the inflation breached the upper end of RBI’s (Reserve Bank of India) 2-6 percent target band for the first time since July 2016. Price growth probably increases to 6.7 percent in December from 5.5 percent in the previous month.

Reserve Bank of India (RBI) cited the statement “much higher than expected” inflation when it unexpectedly kept interest rated unchanged in December following five cuts totaling 135 points earlier in the year.

Mr. Shilan Shah, senior Indian economist at Capital Economics Ltd. in Singapore said, Inflation of 6 percent plus “would almost certainly bring an end to the RBI’s easing cycle”. A rise in the core inflation over the coming quarters should prompt the central bank to switch to a tightening mode much sooner than is generally expected.

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