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Brent Crude Oil Jumps 25% Amid Iran War, Nirmala Sitharaman Says Inflation Impact Limited
Due to the Iran war, the price of crude oil in the international market has risen by 25% to $107 per barrel, a four-year high. Finance Minister Nirmala Sitharaman told Parliament that this will have a limited impact on retail inflation, as inflation is currently low.
The Iran war has resulted in the price of Brent crude oil in the world market increasing by more than 25% in one day on Monday, touching $107 a barrel-the highest in four years. It is a relief that this will not affect our inflation rate in the country in a major way.
Finance Minister Nirmala Sitharaman told Parliament on Monday that the rise in crude oil prices will have a small impact on the retail inflation rate in the country. In her written reply to Parliament, Ms. Sitharaman said, “Inflation is at a low level and this will help keep the rise in crude oil prices in check.”
He stated that international crude oil prices had been falling for the past year before the start of the Iran war on February 28th. The current inflation rate mitigates the impact of the oil price increase, and no assessment has yet been made of the impact of the increase in crude oil prices on inflation.
The retail inflation rate for January this year was recorded at 2.75 percent. The RBI has set a retail inflation band of four percent. The RBI considers inflation above six percent to be uncontrollable. Therefore, given the current inflation rate, even if inflation increases due to crude oil, it will remain below the maximum limit.
