India's inflation risks rise on supply-side disruptions, central bank says
- Inflation may have been contained within the tolerance band, but upside risks have increased
MUMBAI: India’s inflation risks have increased, driven by supply-side disruptions including the Iran war and weather-related uncertainties, the central bank said in its monthly economic report released on Thursday.
Here are the details:
If the West Asia conflict persists and supply chains are not restored early, that may create challenges to the domestic economy.
Strong macro fundamentals should help the economy withstand shocks.
Inflation may have been contained within the tolerance band, but upside risks have increased, driven by supply-side disruptions including weather-related uncertainties.
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Possible second-round effects with the supply shock transforming itself into demand shock warrant careful and continuous assessment.
India’s foreign exchange reserves remain comfortable, providing cover for goods imports of around 11 months.
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