Impact of High Oil Prices on Economy – UPSC Prelims

  • Surge in global energy prices trigger a ‘terms-of-trade’ shock, where import prices rise faster than export prices, for large net energy importers like India, resulting in a hit on current account balances.
  • The high fuel prices would result in higher inflation rates.
  • The higher retail inflation would strain monetary policy and dampen economic growth and stress some bank borrowers.
  • Additionally, this could impact domestic consumption and investment as well.
Scroll to Top