What is imported inflation in India?

Imported inflation occurs when rising prices of imported goods, driven by higher global demand or domestic currency depreciation, increase general price levels in India.

How will rupee depreciation affect Indian prices?

Rupee depreciation makes imports like gold, oil, and intermediate goods more expensive, directly increasing wholesale and retail prices in India.

Will GST rate changes impact India's inflation?

Yes, GST rate restructuring, particularly cuts, could help lower the impact of rupee depreciation on domestic inflation and consumer prices.

Home / Business and Economy / Rupee's Fall Fuels Imported Inflation Fears

Rupee's Fall Fuels Imported Inflation Fears

14 Dec

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Summary

Rupee depreciation of 5% may increase imported inflation significantly.
Gold, oils, and fats prices are already showing imported inflation.
GST rate cuts and CPI restructuring may influence inflation outcomes.

Rupee's Fall Fuels Imported Inflation Fears

India is bracing for a surge in imported inflation as the Indian rupee depreciates by nearly 5% against the US dollar in 2025. This currency devaluation is expected to drive up the cost of essential imports like crude oil, gold, and edible oils, directly impacting consumer prices. Experts predict that the effects will become evident in wholesale and retail prices within months, affecting sectors from automobiles to daily essentials.

The rising cost of imported goods is already a concern, with the imported inflation component of the CPI basket reaching 1.6%, primarily due to gold and oils. The upcoming restructuring of India's Consumer Price Index (CPI) is also anticipated to alter inflation dynamics. Increased weightage for imported raw materials and electronics could amplify the impact of currency depreciation, making imported inflation a key driver in early 2026.