Recent research from DBS Group and Deutsche Bank highlights the impact of rising energy prices on inflation in both India and the United States. In India, DBS Group Research projects that March Consumer Price Index (CPI) inflation will edge up to 3.45% year-on-year from 3.2%, primarily due to higher cooking gas, energy, and input costs, while retail fuel and food prices remain benign. The correction in precious metals has helped temper overall price pressures. DBS expects the effects of higher energy prices to filter through gradually in the coming months, but core inflation is likely to stay below 4%, supporting the Reserve Bank of India's continued neutral pause on monetary policy [1].
In the United States, Deutsche Bank economists anticipate a sharp acceleration in March CPI, driven by a surge in gasoline prices. They project headline CPI to rise by 0.95% month-on-month, the strongest increase since June 2022, which would lift the annual rate back to 3.4%. This marks a notable reacceleration, with the energy price spike now clearly visible in the data. Core CPI, which excludes energy and food, is expected to rise more moderately, with a monthly increase of 0.33% and a year-on-year rate of 2.7%, keeping underlying inflation above the Federal Reserve’s 2% target [2].
Both reports emphasize that while energy-driven headline inflation is rising, core inflation remains more subdued. In India, this dynamic reduces the need for the central bank to adopt a hawkish stance, while in the US, the focus remains on how persistent energy shocks may influence future Federal Reserve decisions. No immediate changes to monetary policy are indicated in either market, as central banks monitor the gradual pass-through of energy costs [1][2].
CONCLUSION
Rising energy prices are pushing headline inflation higher in both India and the US, but core inflation remains contained, leading central banks to maintain their current policy stance. Market participants are closely watching for further energy price developments and their potential impact on future inflation readings.