Oil’s rise complicates global war on inflation

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Oil’s rise complicates global war on inflation

Oil & Gas 12 Apr 2024 03:19 PM IST Economic Times

Oil’s on the boil, and India's finances wouldn’t look that pretty if fuel-stoked inflation rearers its ugly head. A Morgan Stanley study showed if global crude oil prices rise to $110-120 a barrel in the next 3-4 months due to supply or geopolitical concerns, India’s inflation fight could stretch.

A $10 increase per barrel could impact consumer prices by 0.2 -1.4% points on the consumer price gauge across Asian economies. India is somewhere in the middle of the pack, with the CPI rising up to 0.5% points for each $10 a barrel increase in oil prices. Any rise in inflation could derail rate easing plans of central banks, including those of the RBI.

Also with many Asian economies being net importers of crude, there will be an impact on the current account defi cit as well. Ten of the 12 economies in the region are net oil importers and would be affected, but the likes of Thailand, Korea, the Philippines and India, which have higher CPI sensitivity to oil price increases and run wider oil deficits, would be more exposed, Morgan Stanley said.

Also Read : India's gas demand to rise 6% in 2024: IEA India’s oil & gas import bill likely to double in 15 years: PPAC

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Oil’s rise complicates global war on inflation

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