Oil threat looms for India as inflation set to breach 6% limit

Rising oil prices add a new risk to already surging inflation in India, clouding the outlook for monetary policy and threatening a nascent rally in sovereign bonds.

Oil briefly rose above $70 a barrel last week for the first time since September amid U.S.-Iran tensions, and while they’ve since eased, prices remain elevated compared to last year. In India, the world’s third-biggest oil importer, costs of everything from food to medicines and mobile-phone services have already been climbing.

Data on Monday will probably show inflation breached the upper end of the Reserve Bank of India’s 2%-6% target band for the first time since July 2016. Price-growth probably accelerated to 6.7% in December from 5.5% in the previous month, according to the median estimate of 36 economists surveyed by Bloomberg.

The Economic Times
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