Business News | Rising Oil Prices, Inflation to Create Headwinds for India’s Economic Growth: BNP Paribas
Get latest articles and stories on Business at LatestLY. India’s economic outlook is likely to face increasing pressure in the coming months as higher crude oil prices and rising inflation weigh on consumption, rural activity and industrial momentum, BNP Paribas said in a research report.
New Delhi [India], September 28 (ANI): India’s economic outlook is likely to face increasing pressure in the coming months as higher crude oil prices and rising inflation weigh on consumption, rural activity and industrial momentum, BNP Paribas said in a research report.
The brokerage said rising oil prices and commodity inflation would remain a “material challenge” for India in the near term, while higher global interest rates could put additional pressure on domestic monetary policy. It noted that Brent crude had risen above USD 100 a barrel and said the Reserve Bank of India now had less room to keep interest rates unchanged.
Also Read | Congress Workers Deface CEC Gyanesh Kumar's Agra Residence During Protest.
The report said India's macro indicators had remained resilient, supported by strong credit growth, auto sales, improving employment data and large food-grain holdings. However, several high-frequency indicators have started showing signs of moderation.
Manufacturing PMI has fallen to its lowest level since August 2021, while growth in new orders and steel production has declined. Industrial production growth also moderated month-on-month. In services, airline passenger traffic, FASTag payments and cargo volumes weakened, while rural activity has been affected by a monsoon deficit, higher food inflation and lower crop sowing.
Also Read | Too Many Ads Before Movie? Hyderabad Consumer Court Slaps INR 75,000 Penalty on Theatre.
BNP Paribas said inflation had risen to 4.8 per cent year-on-year in August, the highest since January 2025, and remained above 4 per cent for three consecutive months. Inflation has also broadened beyond food and fuel, with core inflation rising partly due to higher metal prices.
The brokerage expects the recent increase in oil prices to put further pressure on inflation. It said the RBI's projection for second-quarter growth stood at 4.7 per cent, in line with the Bloomberg consensus, while higher oil prices could reverse the recent moderation in inflation expectations.
The report also highlighted weakening rural dynamics, with August reservoir levels at 68 per cent of capacity compared with 83 per cent a year earlier, tightening sowing areas. Agriculture GVA growth slipped to 3.6 per cent year-on-year from 3.9 per cent in March 2026.
Despite these risks, strong bank credit growth and continued government grain procurement provide some support to the economy, the brokerage said. (ANI)
(The above story is verified and authored by ANI staff, ANI is South Asia's leading multimedia news agency with over 100 bureaus in India, South Asia and across the globe. ANI brings the latest news on Politics and Current Affairs in India & around the World, Sports, Health, Fitness, Entertainment, & News. The views appearing in the above post do not reflect the opinions of LatestLY)