Oxford Economics warns of worsening inflation outlook in India
New Delhi: Head of the West Asia Research Division at Oxford Economics, Alexandra Hermann Prasad, has warned of a sharp rise in inflation in India, stating that by the end of this year inflation levels are likely to exceed the projections made by the Reserve Bank of India (RBI).
According to Kashmir Media Service, in an interview with ETV Bharat, Alexandra Hermann Prasad cautioned that a surge in global fuel prices could trigger significant inflationary pressures in India.
She said that while the direct impact of oil price increases is already visible, their indirect effects are far more severe, as businesses continue to face mounting fuel costs and persistent supply chain pressures. Even a 10 per cent increase in fuel prices, she noted, could push core inflation up by 0.3 to 0.4 percent within just three to four months, with core inflation projected to reach 6.4 per cent in the fourth quarter of 2026, a figure higher than the estimate provided by the RBI.
Alexandra Hermann Prasad further said that key sectors including, industry, manufacturing, transport, restaurants, hospitality, agriculture, and supply chains, are likely to be hit the hardest. “Food prices will rise, and the impact on the transportation sector will become clearly evident over the coming months. Sectors such as goods supply and agriculture will also be affected,” she said.
She added that, in view of the monsoon and kharif crop season, fertilizer supply could become a major concern, while disruptions in supply and demand imbalances may further strain the economy.
She also warned that rising inflation and pressure on the Indian rupee could force the central bank to hike key interest rates twice, each time by 25 basis points before the end of this year. She noted that although India has so far not fully passed the burden of rising global oil price onto consumers, sustaining this approach may become difficult if global prices continue to rise.
