Russia-Ukraine crisis-led global hike in crude oil prices to USD130
Russia-Ukraine crisis-led global hike in crude oil prices to USD130

NEW DELHI: The global rise in crude oil prices caused by the Russia-Ukraine crisis to $130 per barrel is expected to trigger an inflationary trend in India, denting both growth and demand recovery.

Prices for everything from food to manufactured goods are expected to rise as a result of the inflationary blow. Furthermore, the trend may force the Reserve Bank of India's Monetary Policy Committee to raise key lending rates, affecting the auto and housing markets.

In January, India's main inflation gauge, the Consumer Price Index (CPI), which measures retail inflation, surpassed the RBI's target range.

According to industry calculations, a 10% increase in crude oil prices adds nearly 10 basis points to CPI inflation.  Furthermore, the main concern is the impact that high crude oil prices will have on India's domestic petrol and diesel prices.

The country imports 85 percent of its crude oil needs, and price increases for transportation fuels are expected to range from Rs 10 to Rs 32 per litre. However, a reduction in excise duty may mitigate the impact on gasoline and diesel prices to some extent, but not entirely. The move could cost the Centre up to Rs 90,000 crore in tax revenue, limiting its ability to incur the FY23 capex budgeted.

Rupee has drops 84-ps to an all-time low of 77.01 against US dollar

Euro declines as war in Ukraine stokes inflationary shock

Crude oil hits 14-year high, India to suffer a major setback

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