India’s Inflation Risk: If The Reason Is Not US-Iran Tension, Then What ? Many countries of the world were engulfed in the fire of the US-Iran war, some became victims of the attack, and due to the disruption of the supply chain due to this war, the bomb of inflation exploded in many countries. India too witnessed the shortage of oil and LPG, but there was no impact of rising inflation. Now a report has come, in which it is being said that inflation may increase in India. The special thing is that the inflation attack is not due to the US-Iran war, but the heat and heatwave are going to be the reason for it. The harsh heat has started appearing in the country and in April itself many states of India have been seen as ‘furnaces of fire’.
According to a Bloomberg report, India could face the threat of inflation this year due to heatwaves and below-normal rainfall. This dual attack is creating new economic pressures amid an already escalating energy cost crisis. Temperatures in parts of northern India reached 47 degrees Celsius (117degrees Fahrenheit) this week, and the increased use of air conditioners and fans to cool homes has pushed energy demand in the country to record high.
ndia’s Inflation Risk
Less rainfall will increase the problem.
The government has also predicted less than normal rainfall during the monsoon season from June to September, which is essential for agricultural activities. Dheeraj Nim, economist at Australia and New Zealand Banking Group, says that the ongoing intense heat and irregular monsoon have increased the risk of increase in food prices, which have remained stable so far. The forecast of rainfall, combined with energy price hike and agricultural input costs, can create a serious situation with increase in food prices in the coming time.
Inflation will surpass 5%!
Heat waves, a weak monsoon, and rising oil prices are expected to increase inflation in India. Dheeraj Nim predicts that the average inflation rate for this fiscal year, which began April 1st , will be around 5% (India Inflation), higher than the Reserve Bank of India’s (RBI) forecast of 4.6%.
For most of last year, inflation in India remained below the Reserve Bank’s 4% target, driven primarily by falling vegetable prices. Economists say this year, it could rise due to unfavorable weather conditions.
US-Iran war, crude prices raise tensions.
Bloomberg economist Abhishek Gupta estimates that if monsoon rains are below normal, inflation could reach 5.8 percent this fiscal year. He recalls the year 2023, when rainfall was 5.4 percent below normal, crop production declined by 3.5 percent, while average food inflation rose to 8 percent.
He said that due to low rainfall, farmers may be forced to use diesel-powered irrigation systems to irrigate their land. This will increase the cost of agriculture. Meanwhile, due to the ongoing US-Iran War, crude oil prices are already above $100 per barrel .
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