Key facts
- India's inflation is estimated to have risen to 5.4% in September.
- Inflation in August was 4.82%.
- The Reserve Bank of India raised interest rates for the first time in four years.
- The central bank shifted its policy stance to 'calibrated tightening'.
- Indian crude oil imports averaged $116.09 per barrel in September.
- Shipping costs have increased significantly due to trade inefficiencies and rerouting.
India's inflation is projected to have accelerated to 5.4% in September, a notable increase from 4.82% in August, primarily due to escalating oil prices and rising costs for energy and food. This projection comes from a Reuters poll of 41 economists, with forecasts ranging from 4.9% to 5.9%.
Economists noted that higher energy prices are beginning to impact broader consumer price index components beyond just transportation costs. In response to the inflationary pressures, the Reserve Bank of India (RBI) increased its key interest rates on Wednesday, marking the first such hike in four years. The central bank also adopted a 'calibrated tightening' policy stance, indicating that further rate cuts are not anticipated in the immediate future.
Data shows that the average price for Indian crude oil imports was $116.09 per barrel in September, and has averaged above $120 per barrel in early October. Global shipping costs are also surging due to trade inefficiencies, longer voyage routes, and reduced tanker availability. India's crude oil import bill has significantly increased, exacerbated by geopolitical tensions in the Middle East, which have disrupted supply, driven up benchmark crude prices, quadrupled freight rates, and led to unprecedented insurance costs for voyages through the Strait of Hormuz.