Oil Prices, Inflation Weigh on India's Economic Growth

India's economic growth is facing increasing pressure due to rising oil prices and inflation. According to BNP Paribas, higher crude oil prices and commodity inflation will remain a 'material challenge' for India in the near term.

The brokerage notes that Brent crude has risen above USD 100 a barrel, leaving the Reserve Bank of India with less room to keep interest rates unchanged.

Despite resilient macro indicators, several high-frequency indicators have started showing signs of moderation. Manufacturing PMI has fallen to its lowest level since August 2021, while growth in new orders and steel production has declined.