GDP growth has been supported by sustained domestic demand and services, RBI officials said. File
| Photo Credit: Reuters

The West Asia conflict remains a challenge to the supply chains of oil and other key commodities and is weighing on business confidence, Reserve Bank of India (RBI) officials stated in the August edition of RBI Bulletin which was released on Tuesday (August 25, 2026).
| Photo Credit: Reuters

The uncertainties concerning the U.S.-Iran peace agreement could have an impact on the outlook through international trade, cost pressures, capital flows and commodity prices, a Reserve Bank of India (RBI) official said in the June edition of RBI Bulletin, which was released on Monday (June 22, 2026). 

“The global economic landscape remains fragile despite some respite gained through the interim U.S.-Iran peace agreement,” they said in the State of the Economy chapter. 

“Any breakdown of the agreement may reignite material risks in terms of inflationary expectations, disrupted critical energy infrastructure, delayed investment spending, food security concerns, adverse financial stability outlook and structurally lower growth,” they maintained. 

According to them, the Indian economy entered this turbulence with much better fundamentals relative to many other countries to sustain the shock. 

“India maintained a consistently high growth, anchored inflation expectations, sustained fiscal consolidation, manageable current account balance and foreign exchange buffers over the previous few years, which adds to its strength vis-à-vis similar other events in the past,” they emphasised. 

An adverse south-west monsoon, if materialised, may weigh on the domestic growth-inflation outlook, they stated.

As an outcome of the West Asia conflict, the CPI headline inflation inched up sequentially to 3.9% (y-o-y) in May 2026 from 3.5% in the preceding month, driven by broad-based increases in all three categories – food & beverages, fuel and core components. 

“Rise in inflation of food and beverages was across classes/sub-classes, barring pulses. CPI fuel inflation also increased significantly over the previous month on account of rise in retail prices of petrol, diesel and compressed natural gas (CNG), the officials said. 

Among other factors, the month-on-month price build-up in CPI-Food and Beverages during May could also be attributed to a seasonal uptrend during summer, which was observed across all classes/sub-classes, except fruits and nuts, they wrote in the Bulletin. 

“This broad-based pick-up in food prices appeared to have continued in June as suggested by the daily prices data available up to June 18,” they stated. 

Within foodgrains, prices of rice and wheat, as well as major pulses, recorded an uptick. Among perishables, prices of major vegetables, viz., potato, onion and tomato, edged up further. 

The month-on- month increase in the prices of edible oils remained broad-based.

Amidst the disruptions to global energy supply chains, the price of the Indian basket crude oil remained elevated despite easing in June from the peak observed in April, the officials stated. 

A surge in international prices has partially been passed on to retail consumers through upward revisions in prices of petrol and diesel in four tranches in May, with cumulative increases of around ₹7.5 per litre and ₹7.6 per litre, respectively.

Domestic household LPG prices were increased by ₹29 per 14.2 kg cylinder in June, following a ₹60 hike in March 2026. 

“Despite the hike, Indian households continue to pay amongst the lowest cooking gas prices in the world, as the government and oil marketing companies (OMCs) have largely prevented the high international prices from feeding into the expenditure budgets of households,” the RBI officials wrote in the chapter.

OMCs absorb under recoveries of about ₹700 per 14.2 kg cylinder as their cost of supply is more than ₹1600.

Wholesale Price Index (WPI) (base year 2022-23) inflation rose to 9.7% in May 2026 from 8.3% in the previous month, the highest in the new base series since April 2024. 

Fuel and power group inflation rose further to 30.3% in May 2026. Manufactured products, with their higher weight, have contributed the most to the total inflation, they stated. 

The industrial and farm input cost inflation too climbed up to 16.7% and 8.9% in May 2026, respectively, from deflationary territory in February, the RBI officials added. 

Published – June 22, 2026 10:51 pm IST

File image.
| Photo Credit: Reuters

High frequency indicators, like vehicles sales, air traffic, steel consumption and GST E-way bills, point towards a sequential pickup in momentum of economic activity during the second half of the fiscal 2024-25 and sustain moving forward, RBI Bulletin said on Wednesday (February 19, 2025).

However, a strong dollar, driven by US economic resilience and trade policy pivots, could exacerbate capital outflows from emerging economies, push risk premiums higher, and intensify external vulnerabilities, said an article on ‘State of the Economy’ published in RBI’s February bulletin.

Economic activity momentum is poised to be sustained, strong rural demand is expected to receive a further fillip from the robust performance of the agriculture sector. Urban demand is also poised for a recovery, tracking decline in inflation as well as a boost to disposable incomes from the sizeable income tax relief announced in the Union Budget 2025-26.

“…high frequency indicators point towards a sequential pick-up in momentum of economic activity during H2:2024-25, which is likely to sustain moving forward,” it said.

The economic activity index (EAI) is constructed by extracting the common trend underlying 27 high frequency indicators of economic activity using a Dynamic Factor Model.

It also noted that the global economy continues to grow at a steady but moderate pace, with divergent outlook across countries amid rapidly evolving political and technological landscapes.

Financial markets remain on edge on the slowing pace of disinflation and the potential impact of tariffs. Emerging market economies (EMEs) are witnessing selling pressures from foreign portfolio investors (FPIs) and currency depreciation engendered by a strong US dollar, the article said.

The central bank said the views expressed in the article are of the authors and do not represent the views of the Reserve Bank of India.

The authors further said the budget measures to fuel four engines of growth – agriculture, MSMEs, investment and exports – are expected to boost medium-term growth prospects of the Indian economy.

“The Union Budget prudently balances fiscal consolidation and growth objectives by continued focus on capex alongside measures to support consumption while providing a clear roadmap for debt consolidation,” the article said.

Further, domestic demand is also expected to benefit from the repo rate cut by the Monetary Policy Committee (MPC) in its meeting on February 7, 2025.

The article also said there was an increase in the share of public sector banks (PSBs) in volume of transactions (from remitter bank side) during January 2025 as compared to the levels recorded a year ago.

The number of technical declines per 10,000 UPI transactions reduced across most bank categories in January 2025 compared to January 2024, reflecting enhanced efficiency of banks’ systems despite higher transaction volumes.

A rising US dollar and FPI outflows from EMEs amidst growing global uncertainties exerted significant pressure on EME currencies during January 2025.

The Indian rupee (INR) depreciated by 1.5% (m-o-m) in January, in line with movements in most major currencies.

“In an environment of heightened global market turbulence, the INR exhibited relatively low volatility,” the article said.

FPI flows turned negative in January 2025, reflecting heightened global uncertainties. Net FPI outflows worth $6.7 billion were recorded with equity outflows of USD 8.4 billion amidst rising risk-off sentiments among investors.

Gross inward foreign direct investment (FDI) rose by 20.6 per cent (y-o-y) to USD 62.5 billion during April-December 2024.

Mumbai:

Deposits are still the most preferred instrument of saving in India although market-based instruments are gaining share, said an article published in the Reserve Bank’s July Bulletin.

The article provides estimates of quarterly financial balance sheet of households and their net financial wealth for 2011-12 to 2022-23.

The article has been authored by Anupam Prakash, Suraj S, Ishu Thakur and Mousumi Priyadarshini, all officials from the RBI’s Department of Economic and Policy Research.

“The accumulation of financial assets and net financial wealth jumped in 2020-21 due to the pandemic-induced restrictions on mobility and spending along with subdued growth in liabilities; net financial wealth has since exhibited some normalisation as household consumption picked up on the return of normalcy,” the article stated.

As at end-March 2023, households’ financial assets stood at 135.0 per cent of GDP while their financial liabilities were 37.8 per cent of GDP; accordingly, their net financial wealth was placed at 97.2 per cent of GDP, it said..

The spike in financial assets during the Covid-19 pandemic led to an increase of 12.6 percentage points in net financial wealth between end-March 2020 and end-March 2023.

“The listed equity wealth of households rose to a peak of 19.4 per cent of GDP as at end-Dec 2021, subsequently moderating to 14.9 per cent of GDP as at end-March 2023. The compilation is restricted to the listed equity holdings in the absence of estimates on unlisted equity investments,” the article said.

It further said while households have leveraged up, their debt-to-financial assets ratio has remained stable.

It may also be noted that a significant proportion of wealth in India is held in terms of non-financial assets such as housing, which are not covered in this article, the authors said.

The central bank said the views expressed in the article are those of the authors and do not represent the views of the RBI.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)