India’s growth may face headwinds from any setback to the US-Iran peace agreement and an adverse southwest monsoon, as the global economic landscape remains fragile, the Reserve Bank of India said in its latest monthly bulletin released on Monday.Geopolitical tensions and trade disruptions have persisted despite the recent interim peace deal in West Asia, according to the article on the State of the Economy published in the June bulletin.
The global economic landscape remains fragile despite some respite from the interim US-Iran peace agreement, the article noted.
“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,” it said.Amid the challenging global backdrop, the Indian economy expanded 7.8% in the fourth quarter of FY26, supported by private consumption and fixed investment. High-frequency indicators for the first two months of FY27 suggest that economic momentum remains sustained, it added.Despite a pick-up in May, consumer price index (CPI) inflation remained anchored. India’s external sector also remained resilient, supported by foreign direct investment (FDI) inflows and adequate foreign exchange reserves.”The Indian economy entered this turbulence with much better fundamentals relative to many other countries to sustain the shock,” the article said.The bulletin noted that the pass-through of higher commercial LPG prices led to a rise in inflation in the “restaurants and accommodation services” category.Among all divisions, inflation in “personal care, social protection and miscellaneous goods and services” remained the highest. Overall, eight of the twelve divisions recorded a sequential increase in inflation during May.The month-on-month build-up in prices under the CPI Food and Beverages category in May was also attributed to an unseasonal summer uptick across most sub-categories, except fruits and nuts.”This broad-based pick-up in food prices appeared to have continued in June, as suggested by daily price data available up to June 18,” the article said.Also Read: Corporate bond yields moderate across tenors in June, spreads edge up: RBI BulletinWithin foodgrains, prices of rice, wheat and major pulses recorded an uptick. Among perishables, prices of key vegetables, including potato, onion and tomato, continued to edge higher. The increase in edible oil prices also remained broad-based.On global energy markets, the bulletin noted that the price of the Indian basket of crude oil remained elevated, despite easing in June from the peak levels seen in April.It added that higher international crude prices were partially passed on to retail consumers through four rounds of petrol and diesel price hikes in May, resulting in cumulative increases of around ₹7.5 per litre and ₹7.6 per litre, respectively.
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