Economic Times: rising fuel prices to strain Indian household budgets as West Asia crisis pushes crude above $100
Speaking to the Economic Times, a chief economist said that crude breaking above $100 will directly affect Indian fuel prices and inflation expectations. The Reserve Bank of India's foreign-exchange intervention toolbox remains active.
Chief economist Manoranjan Sharma told the Economic Times that the Indian economy is among the markets most exposed to the West Asia crisis. Brent crude breaking the $100 level in the latest wave is again pushing up inflation expectations in India, where diesel and LPG account for a sizeable share of household budgets.
Sharma added that the Reserve Bank of India's foreign-exchange intervention toolbox remains active, and that the rupee trading near 86 to the dollar has cushioned the fuel-price pass-through but is also weighing on disposable household income. New Delhi is reviewing the buffer mechanisms that already rely on gross fuel taxes.
Finance ministry sources said additional sales from the strategic reserve could be used to support the domestic market if needed. The Reserve Bank of India's late-June monetary policy decision will be closely watched. This article is not investment advice.
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