Key facts
- Indian inflation remains anchored below the central bank's target despite a recent energy shock.
- The Reserve Bank of India stated that the pass-through of energy price shocks to domestic prices has been limited.
- The Indian economy entered the current global turbulence with strong fundamentals, including high growth and anchored inflation expectations.
- An adverse south-west monsoon may pose headwinds for the domestic growth and inflation outlook.
- Geopolitical tensions and trade disruptions persist despite an interim peace deal in West Asia.
Indian inflation remains anchored below the central bank's target despite a recent energy shock, with limited pass-through to domestic prices, according to the Reserve Bank of India's monthly bulletin. The economy entered the current global turbulence with strong fundamentals, including high growth and anchored inflation expectations, the report published late Monday said.
An adverse south-west monsoon may pose headwinds for the domestic growth and inflation outlook, even as the global economic landscape remains fragile, the Reserve Bank Bulletin said. Geopolitical tensions and trade disruptions persisted despite the recent interim peace deal in West Asia, said an article on State of the Economy published in the June Bulletin.
The global economic landscape remains fragile despite some respite gained through the interim US-Iran peace agreement, the article said. "Any breakdown of the agreement may reignite material risks in terms of inflationary expectations, disrupted critical energy infrastructure, delayed investment spending, food security concerns, adverse financial stability outlook and structurally lower growth," it noted.