By Fabiana Negrin Ochoa and Jihye Lee
India's consumer-price growth accelerated in March, as war in the Middle East disrupted supply chains and pushed up oil and gas prices.
The consumer-price index rose 3.40% in March, compared with the 3.21% increase in February, government data showed, slightly undershooting the 3.48% rise expected in a Wall Street Journal poll.
India's central bank is keeping a close watch on inflation trends after opting to hold rates steady last week.
The economy entered the crisis in a solid position, with steady growth and low inflation. So far, headline inflation remains in check and core price pressures are muted, the Reserve Bank of India said.
For now, the central bank projects consumer inflation for the new fiscal year at 4.6%, within the tolerance band.
But the RBI warned that the war has rendered the future inflation outlook uncertain, and said that it would remain vigilant to unfolding developments.
President Trump earlier ordered the blockading of the Strait of Hormuz after talks with Iran collapsed, a move that threatens to deepen the inflationary shock from energy and widen it out to other goods.
An energy crisis would hit Asia harder than any other region, as it receives nearly 90% of the crude that flows through the strait.
"A prolonged Hormuz closure does not merely raise APAC energy costs; it threatens the physical supply chains that underpin regional manufacturing and trade," said analysts at BMI, a unit of Fitch Solutions.
Under a scenario of $110-a-barrel oil, BMI sees a mix of slowing growth and rising inflation that would present the RBI with a "stagflationary" dilemma that would be difficult to navigate.
RBI data already show household inflation expectations are rising, with consumers anticipating price pressures across most product groups including food and services.
Much will depend on how the situation in Iran unfolds. It remains unclear whether the temporary cease-fire with the U.S. will hold or whether tensions will escalate again.
Like other central banks, the RBI will be monitoring price and growth dynamics to gauge the trade-off between tightening monetary policy to curb inflation and potentially slowing economic activity.
Write to Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com and Jihye Lee at jihye.lee@wsj.com
(END) Dow Jones Newswires
04-13-26 0654ET
