India's CPI Inflation Projected to Rise to 4.8% Amid High Crude Prices and Weak Monsoon
India's CPI inflation to hit 4.8% on high crude, weak monsoon: Report
Asianet Newsable
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India's Consumer Price Index (CPI) inflation is expected to increase to 4.8% due to high crude oil prices averaging $90 per barrel and a downgraded monsoon forecast. The GDP growth is projected to slow to 6.3%, with fiscal and current account deficits widening.
- 01CPI inflation is projected to rise by 70 basis points from 4.1% to 4.8%.
- 02GDP growth is expected to moderate to 6.3%, down from 6.7%.
- 03The fiscal deficit is anticipated to widen to 4.6% of GDP, and the current account deficit to 2.1% of GDP.
- 04India sources nearly 50% of its LPG and 30% of its natural gas through the Strait of Hormuz.
- 05The domestic agricultural outlook has weakened, with the monsoon forecast downgraded to 90% of the Long Period Average.
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According to a report by 360 ONE Capital, India's Consumer Price Index (CPI) inflation is projected to rise to 4.8% in FY27, primarily driven by crude oil prices averaging $90 per barrel and a downgraded monsoon forecast. This marks an increase of 70 basis points from the previous estimate of 4.1%. The report also predicts a slowdown in GDP growth to 6.3%, down from 6.7%, alongside a widening fiscal deficit expected to reach 4.6% of GDP and a current account deficit of 2.1% of GDP. Geopolitical tensions in West Asia, particularly affecting energy supply routes, pose significant risks to India's economic stability. Additionally, the Indian Meteorological Department has downgraded the Southwest Monsoon forecast to 90% of the Long Period Average, raising concerns over agricultural output and rural demand. Global economic conditions are also tightening, with the IMF projecting lower growth rates due to rising commodity prices and inflationary pressures.
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The rise in CPI inflation and the weakened monsoon forecast could lead to increased food prices and reduced agricultural output, affecting rural economies.
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