RBI paper finds global oil price hikes raise India’s inflation, with a 10% rise adding 20 bps to headline inflation.

• Oil shocks significantly affect monetary policy in net oil importers like India, hurting growth and raising inflation.
• Post-deregulation, the crude price impact on fuel inflation is muted due to taxes and government interventions.
• Rising oil prices also indirectly push inflation via higher transport and input costs across the economy.