Concerns over rising food and fuel prices

West Asia tensions are increasingly impacting India’s economy, with inflation fears rising since the onset of the conflict. According to an ICICI Bank Global Markets report, food and fuel prices have already increased, and further pressure is expected due to El Nino conditions and the possibility of below-normal rainfall in the country.

The report warns that inflation could reach around 5% in the 2026–27 financial year if rainfall falls significantly below normal. It also suggests that the Reserve Bank of India (RBI) may consider a 50–75 basis points hike in interest rates to control rising prices, as the current repo rate stands at 5.25%. Consumer inflation has already touched a 16-month high, with further risks from reduced agricultural output.