“Fossil Fuel Prices and Inflation in India” Report
A report titled “Fossil Fuel Prices and Inflation in India” has highlighted that fossil fuel-related items like transport and household energy have contributed to 20 percent of India’s annual rate of inflation between April and May 2022. The report was released by Cambridge Econometrics, a research group that specializes in economic analysis and forecasting. India’s annual inflation rate ranged between 7 and 8 percent during the April to May period. The report found that the high prices of fossil fuels have significantly impacted the overall inflation rate in the country. Between January 2021 and August 2022, prices of fuel and power surged nearly five times faster than the overall consumer price in India, leading to an exponential increase in household expenses on fuel and electricity.
Joint impact of rising oil prices and supply chain disruptions
The report also highlights that the global supply chain disruptions, which were caused by the COVID-19 pandemic, have impacted the prices of petroleum products in India. These disruptions, coupled with the rise in oil prices, have led to a significant increase in the cost of fuel and electricity.
According to the report, if the global oil prices remain high, it will be difficult to keep inflation under control in India. The Indian government has been implementing various measures to keep the prices of petroleum products under control, such as reducing taxes on petrol and diesel. However, the report suggests that these measures may not be enough to offset the impact of rising global oil prices.
Impact on India’s economic growth
The rise in fossil fuel prices could also impact India’s economic growth. The report suggests that high inflation rates could lead to a decrease in consumer spending, which could, in turn, affect the country’s economic growth. It is essential for India to implement policies that can help mitigate the impact of fossil fuel-related inflation. The report suggests that investing in renewable energy and energy efficiency measures could help reduce the country’s reliance on fossil fuels. This could help in reducing the impact of high oil prices on the economy.