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<ul><li>Low inflation in India is attributed to lower <keyword id="102132" type="PERSON" weightage="20" keywordseo="Crude-Oil-Prices">crude oil prices</keyword> which were range bound in the last six months. </li><li>On Monday, the prices of Brent crude jumped a massive 12%, recording its biggest single-day leap in recent times. </li><li>The last time this happened in 2008, India was thrown into a crisis mode </li></ul> India has been enjoying low consumer price inflation which has been falling every month, to 3.15%. Apart from slowdown which has hit consumer sentiment, low inflation is also attributed to lower crude oil prices which has been trading under and around $60 a barrel for the last 6 months. Now, this party is all but over. On Monday (September 16), the prices of Brent crude jumped a massive 12%, recording its biggest single-day leap in recent times. At 7.48 a.m., Brent was trading at $66.90 a barrel, says IANS. This was triggered by a drone attack on the largest oil producing company, Saudi Aramco by the rebels who have taken over neighbouring country, Yemen. The drone attacks claimed by Yemen's Houthi rebels set alight two major oil facilities run by the state-owned company Aramco in Saudi Arabia on Saturday, the Kingdom's Interior Ministry said. According to a note by Reliance Commodities, this could disrupt the global supply by more than 5%. “Prices eased off their peaks after US President Donald Trump said he approved the release of oil from the U.S. Strategic Petroleum Reserve (SPR) if needed in a quantity to be determined due to the attack on Saudi Arabia’s facilities,” the note said. India’s oil crisis However, India’s oil supply might not be heavily disrupted right away. As per a Reuters report, Aramco assured an Indian refiner that its supply won’t be hit. That however is not stopping speculation that oil prices will see an unprecedented rise from now on. A few believe that it could hit $100 per barrel. The last time this happened in 2008, India was thrown into a crisis mode depleting the reserves of oil marketing companies, even as anger over government <a href="https://m.economictimes.com/news/politics-and-nation/left-bjp-to-protest-against-fuel-price-hike-on-friday/articleshow/2784642.cms">led to protests</a> and bundhs. Hedge funds and money managers increased their positions on US futures, as per Reliance note. It means that they are betting on the prices to rise in the near future. This would also impact Indian retail prices immensely and debunk the already flailing auto sales across the country. With inputs from IANS SEE ALSO <a href="https://www.businessinsider.in/rbi-may-cut-rate-again-after-wholesale-inflation-and-consumer-price-data/articleshow/70674656.cms">India's inflation has dropped so low it may trigger another rate cut</a>

India’s low inflation party might be over as the world braces for a crude price spike

The unprecedented rise in India’s <keyword id="143728" type="General" weightage="20" keywordseo="inflation-rate" source="Orion">inflation rate</keyword> has put an added strain on the <keyword id="6390778" type="General" weightage="20" keywordseo="Common-man" source="Orion">common man</keyword>’s pockets. Driven by rising food and fuel prices, <a href="https://www.businessinsider.in/finance/news/indias-wholesale-inflation-rises-further-to-15-08-in-april-from-14-55-a-month-ago/articleshow/91614591.cms">retail </a><keyword id="22195" type="General" weightage="20" keywordseo="inflation" source="Orion">inflation</keyword> soared to an eight-year high of 7.79% and the <a href="https://www.businessinsider.in/finance/news/indias-wholesale-inflation-rises-further-to-15-08-in-april-from-14-55-a-month-ago/articleshow/91614591.cms">Whole Price Index</a> (WPI) rose to 15.08% in April. Additionally, India’s rural inflation in the food basket was 8.38%, higher than urban inflation at 7.09%. <div type="image" title="Retail inflation soared to 7.79% in April" msid="91672724" hostid="261" caption="&amp;lt;p&amp;gt;Retail inflation soared to 7.79% in April&amp;lt;/p&amp;gt;"></div> High inflation also means the rupee is losing its power. In our <a href="https://www.businessinsider.in/finance/news/rupee-continues-to-fall-to-record-lows-and-it-might-affect-your-food-education-healthcare-and-other-expenses/articleshow/91535452.cms">previous newsletter</a>, we discussed how the Indian currency’s decline impacts your food, education, healthcare and other expenses. In today’s extension of the last newsletter, we will take a look at how inflation is putting more pressure on the common man’s pockets. What is inflation and what does it mean for the common man? Simply put, inflation is when there’s a rise in the prices of essential goods and services such as food, clothing, housing, transport, etc. So, everything gets expensive. In India, generally, two kinds of indices are used to measure inflation— Whole Price Index (WPI) and Consumer Price Index (<keyword id="6355865" type="General" weightage="20" keywordseo="CPI" source="Orion">CPI</keyword>). <div type="image" title="All India inflation rates based on CPI and food price index" msid="91672757" hostid="261" caption="&amp;lt;p&amp;gt;All India inflation rates based on CPI and food price index&amp;lt;/p&amp;gt;"></div> The situation is so alarming that India’s central bank, the Reserve Bank of India (RBI), has shifted its <a href="https://theprint.in/economy/in-sequence-of-priorities-now-rbi-shifts-focus-to-inflation-over-growth-das/908245/#:~:text=Search-,In%20sequence%20of%20priorities%20now%2C%20RBI%20shifts,to%20inflation%20over%20growth%3A%20Das&amp;text=Mumbai%2C%20Apr%208%20(PTI),Shaktikanta%20Das%20said%20on%20Friday.">focus </a>from pushing growth to mitigating the ripple effects caused by inflation. Over the past 3 months, retail inflation numbers have remained above the RBI’s upper tolerance limit of 6%. The last time inflation was below 4% was before the global pandemic in 2019. Due to the soaring inflation, consumers are losing purchasing power, which is a measure of how many goods or services you can buy with a unit of currency, at a faster-than-usual rate. If you could buy one liter of cow milk for ₹45 a few months ago and now you can only buy it for ₹50, the value of your money has reduced. And India’s common consumers are among the worst sufferers of this inflation, as they are struggling to manage their daily expenses with limited purchasing power on a minimum wage. Reason behind this price rise and its ripple effects The high rate of inflation in April was primarily due to the rise in prices of mineral oils, basic metals, crude petroleum and natural gas, food articles, non-food articles, food products and chemicals and chemical products than the last year. <div type="image" title="Rise in price of basic items" msid="91672795" hostid="261" caption="&amp;lt;p&amp;gt;Rise in price of basic items&amp;lt;/p&amp;gt;"></div> While the country was still healing through the after-effects of COVID-19, the war in Ukraine has significantly increased the common man’s woes. The war has caused a disruption in the global supply chain and pushed the prices of crude oil and other commodities. <a href="https://www.businessinsider.in/finance/news/snacks-health-bills-electricity-bills-and-more-will-add-to-your-chunkier-home-loan-emis/articleshow/91429752.cms">Higher fuel prices</a> add to the transport costs, putting an extra <keyword id="6370923" type="General" weightage="20" keywordseo="Burden" source="Orion">burden</keyword> on daily food commodities as well as essential non-edible products. Due to the export ban by <a href="https://www.businessinsider.co.za/the-impact-of-indonesias-palm-oil-export-ban-on-south-africa-2022-5">Indonesia</a>, switching from a rather expensive Sunflower oil to palm oil would not make much of a difference, too. This hike in fuel, oil and travel has resulted in Fast Moving Consumer Goods (FMCG) giants like <a href="https://www.businessinsider.in/business/corporates/news/the-big-boss-of-indias-largest-consumer-company-is-worried-about-stagflation-and-unprecedented-inflation/articleshow/91251341.cms">Hindustan Unilever</a>, Britannia, Nestle and Coke hiking their prices by 3-10% across their wide portfolio and have <a href="https://www.outlookindia.com/business/why-major-fmcg-brands-have-opted-for-shrinkflation--news-196667">shrunk </a>their products. The second increase in the price of domestic cooking gas cylinders, also known as LPG cylinder, by Rs 50 in two months, will add an extra burden to your expenses. With the <a href="https://www.ndtv.com/india-news/cooking-gas-cylinders-price-raised-by-rs-50-for-homes-2953666">revised rates</a>, a 14.2-kg non-subsidised cooking gas cylinder will now cost ₹ 999.50 in several cities. Expensive healthcare will also make a dent in your monthly budget as the government allowed pharma companies to hike prices by <a href="https://timesofindia.indiatimes.com/business/india-business/govt-to-allow-prices-of-essential-drugs-to-go-up-over-10-from-apr/articleshow/90449781.cms">10% for essential medicines</a> in April. This hike includes painkillers, antibiotics, cardiac medicines and 850 formulations in total. The rising inflation will not only directly impact the daily expenses of a wage earner that are slowly recovering from COVID-19’s impact but it also threatens to put them under further stress due to the recent hike in interest rates. After May 21, home loan EMIs will see a hike as RBI increased <a href="https://www.businessinsider.in/finance/banks/news/rbi-hikes-repo-rate-by-40-basis-points-to-4-4-as-it-seeks-to-reign-in-inflation/articleshow/91311941.cms">interest rates</a> by 40 basis points this month. 100 basis points make one percent. Low-interest rates are unlikely to come back as India’s own central government predicts that the country’s economy will take at least <a href="https://www.livemint.com/news/india/india-s-economy-to-overcome-covid-losses-in-fy35-recovery-remains-stimulus-dependent-rbi-11651238870034.html">12 years</a> to overcome covid-19 losses. It said that the ongoing structural changes catalysed by the pandemic can potentially alter the growth trajectory in the medium-term. <div type="image" title="Retail inflation rises to 7.79% in April" msid="91672851" hostid="261" caption="&amp;lt;p&amp;gt;Retail inflation rises to 7.79% in April&amp;lt;/p&amp;gt;"></div>

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