India’s imported inflation surged to its highest level in 13 months in September 2024, increasing by 2 percent, according to a recent report from the State Bank of India (SBI). The rise in imported inflation is adding pressure to the country’s overall inflation levels, fueled by higher prices of imported commodities like crude oil, gold, and chemicals.
Imported inflation refers to the increase in domestic prices of goods and services due to higher costs of imports. According to the SBI report, this trend is becoming more prominent as India’s dependency on imports like gold and edible oils rises. The report noted, “The share of imported inflation in the overall inflation has also risen. The imported inflation has registered a growth of 2 percent in September, which is the highest reading in the last 13 months. Gold prices, oils and fats, and chemical products are major contributors.”
The report highlighted a significant spike in gold imports, which reached $10.06 billion in September 2024, compared to $4.94 billion during the same period last year. This marked the highest gold import value between January and September this year. In August alone, gold imports rose sharply by 103.7 percent in value, while between April and August 2024-25, they grew by 25.2 percent. However, the volume of gold imports saw mixed results, increasing by 62.24 percent in August but declining by 2.18 percent for the April-August period.
This increase in the value and volume of gold imports underscores the impact of global market dynamics on India’s domestic economy.
India’s overall inflation is also on the rise. Retail inflation reached a nine-month high of 5.5 percent in September, compared to 3.65 percent in August. A sharp increase in food prices was the primary driver of this spike.
The inflation rate for food and beverages surged to 8.36 percent in September, a notable jump from 5.30 percent in August. Vegetable prices contributed significantly to this increase, accounting for 2.34 percent of the overall inflation rate.
The growing share of imported inflation poses a challenge to the Indian economy. As the country continues to rely on essential imports, fluctuations in global prices directly impact domestic inflation. The rising costs of imported goods such as gold and chemicals add to inflationary pressures, affecting both consumers and businesses.
The SBI report highlights the delicate balance India faces as it navigates global market conditions, with imported inflation playing a crucial role in shaping the country’s economic outlook.
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