The rise in retail inflation has been visible since September and it had come down to 6.01% in January and one of the main reasons for this was the rise in oil prices. However, these prices were reined in before the elections, even though the international crude oil prices are increasing continuously and that is why the effect of inflation in the month of February did not affect us so much. According to the Reserve Bank of India, inflation should not exceed 6%. Inflation figures for the month of February will come in front of the Monetary Policy Committee in a few days, after which it has to be seen what will be their opinion on the interest rate. However, due to the crisis in Ukraine and Russia, the tension on the committee will continue to increase in crude oil prices. There is also hope that inflation should be reduced by reducing the excise duty on oil.
Inflation in the US stood at 7.9% in the month of February. The general consensus is that inflation isn't just transient: investors across the board are betting on high inflation over the long term. Energy prices are about to rise due to the Ukraine and Russia crisis. Inflation can even go up to 9% in the month of March. High inflation and uncertain growth continue to be a headache for the Federal Bank of America as the Fed has to decide what rates to keep in its meeting on Tuesday. The US Fed chief had indicated that the rate could be increased by 25 basis points. Even in the month of March, if inflation does not come down, then the Fed can increase the interest further and due to this, money can also be withdrawn from India's emerging market.
OPEC countries will release a monthly report on global crude oil prices on Tuesday. However, it is still being speculated that despite the increasing demand since the Corona epidemic, these countries will be strict regarding production. The rise in oil prices is also being seen because Russia has attacked Ukraine. OPEC+ and its allies, including Russia, have determined that they will increase output to 400,000 per barrel in March. Last week, the US imposed a ban on Russian oil imports, due to which supply concerns have increased. The US has asked OPEC countries to increase their oil production capacity, but OPEC countries say that there is insufficient oil capacity to compensate for the loss of Russia's supply.
Europe has gone through both inflation and deflation, currently retail inflation in Europe is 5.1%. On Thursday of this week, we will have the figures for what effect this crisis has had on prices. According to the European Union, inflation stood at 5.8% in February and may increase further.