Rural inflation stood at 3.63%, while urban inflation was 3.11% under the revised CPI series that uses 2024 as the base year. A Reuters poll of 45 economists had estimated that inflation likely edged up modestly to 3.48% in March, with a sharp rise in fuel prices partially offset by a roughly 11% fall in gold prices during the month following escalation in tensions linked to the Iran war. Also Read: RBI holds repo rate, flags supply chain risks to inflation & growth Despite the uptick, inflation has remained below the Reserve Bank of India’s 4% medium-term target band (2%–6%) for 12 consecutive months under the revised framework. Middle East tensionsThe latest inflation reading comes against the backdrop of heightened geopolitical uncertainty involving Iran, Israel and the United States, raising concerns over global oil supply disruptions. Tensions escalated after the US imposed a naval blockade on Iranian ports, unsettling energy markets and intensifying regional hostilities. The move has put pressure on the Strait of Hormuz, a critical route for global oil shipments. Washington said the restrictions would target vessels linked to Iranian maritime activity while still allowing transit to non-Iranian ports to reduce wider disruption. Tehran, however, rejected the pressure and warned of retaliation, further deepening market uncertainty. RBI flags external risks but stresses resilienceAt its April Monetary Policy Committee meeting, the Reserve Bank of India noted that while India’s macroeconomic fundamentals remain strong, external shocks could intensify if global tensions persist or expand. Also Read: RBI Inflation 2026–27: Sanjay Malhotra & Co peg FY27 inflation projection at 4.6% as war risks cloud outlook “The fundamentals of the Indian economy are on a stronger footing, providing it with greater resilience to withstand shocks now than in the past. The economy is confronted with a supply shock. It is prudent to wait and watch the changing circumstances and the evolving growth-inflation outlook,” Reserve Bank of India Guv Sanjay Malhotra had said. Revised CPI basket changes the baseThis marks the third inflation reading under the revised CPI framework, which updates the base year to 2024 from 2012 and revises the consumption basket to better reflect current spending patterns. Under the new series, the combined weight of food and beverages has declined to 36.75% from 45.9%, though it remains the largest component of the index. Food alone now accounts for 34.77%. The weight of housing, utilities, and fuel-related categories has risen to 17.7% from 16.9%, while services such as transport, communication, and household services now carry higher representation. The updated basket also includes new-age consumption items such as rural housing, OTT subscriptions, value-added dairy products, and digital storage devices, while removing outdated categories like VCRs and audio cassettes. RBI outlook for FY27 inflationThe Reserve Bank of India’s Monetary Policy Committee has projected CPI inflation at 4.6% for FY27, with quarterly estimates of 4.0% in Q1, 4.4% in Q2, 5.2% in Q3, and easing to 4.7% in Q4. Core inflation is projected at 4.4%. The central bank also noted this is the first time it has provided such a detailed quarterly breakdown, reflecting increased focus on transparency and stakeholder inputs. Since the last policy review, the RBI has said global uncertainty has increased. While inflation remains broadly contained, upside risks persist, including potential second-round effects if geopolitical pressures continue to build. (You can now subscribe to our Economic Times WhatsApp channel) (You can now subscribe to our Economic Times WhatsApp channel)
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The Houthis in Yemen have announced a blockade of Saudi Arabian shipping through Red Sea ports, including at the Bab el-Mandeb strait. The group, described as Iran-backed, stated the measure would target the top oil exporter following recent exchanges of fire.
Reports indicate this could add to existing maritime disruptions in the Strait of Hormuz linked to US-Iran confrontations.
A Reuters poll of economists conducted July 7-16 shows that most Gulf Cooperation Council economies are now projected to contract more sharply in the current year than estimated three months earlier, with median forecasts indicating declines of 8.1% for Kuwait and Qatar, 5.
1% for Bahrain, and 0.5% for the UAE. Saudi Arabia and Oman remain the only GCC economies expected to expand. The poll links the revisions to reduced export volumes through the Strait of Hormuz, higher freight costs, and weaker investor sentiment, even as oil prices have risen.
Initial reports indicate that a limited number of vessels transited the waterway during the first full day after the United States implemented a naval blockade of Iran. These observations have not been independently verified.
The head of the UN’s nuclear agency yesterday signaled that Iranian nuclear enrichment sites would be visited by his inspectors, a key component in the interim deal between the US and Iran to reach an end to their war. The comment by International Atomic Energy Agency (IAEA) Director-General Rafael Grossi was the firmest yet from the agency, which is viewed as key in determining the status of Iran’s nuclear stockpile.
Since Israel launched a 12-day war on Iran last year, the IAEA has been blocked by Tehran from visiting enrichment sites where the Islamic republic is believed to store enough highly enriched uranium to potentially build as many as 10 nuclear weapons.
Photo: AP Iran has said that its program is peaceful, although it would be the only country in the world to have uranium enriched up to 60 percent purity without a weapons program. The US and Iran offered contradictory remarks on Tuesday about whether those sites would be inspected.
“I can understand political statements, they are part of the reality, but the fundamental thing I would like to remind you and draw your attention to is that there has been a memorandum of understanding, signed by both presidents,” Grossi told journalists at a news conference at the Fukushima Dai-ichi nuclear power plant.
The accord “explicitly states that the nuclear activities that are going to be carried out with the regards of the nuclear material facilities will be supervised by the IAEA — in all letters,” he said. “Obviously, to do that, we have to inspect,” Grossi added.
BOOST: By operating the same advanced systems as the US military, Taiwan would be better positioned to share and integrate intelligence with partners, an expert said The first batch of MQ-9B SkyGuardian drones has arrived in Taiwan, and is being assembled and tested by drone manufacturer General Atomics and the military ahead of flight trials as part of the air force’s acquisition to bolster its aerial surveillance capabilities, a source said yesterday.
The air force allocated a budget of NT$21.7 billion (US$687 million) from 2022 to 2029 to procure four MQ-9B uncrewed aerial vehicles (UAVs) manufactured by General Atomics along with associated equipment such as ground control stations. The US has agreed to deliver the four MQ-9Bs to Taiwan in two batches this year and next ‘BRAZEN’: The holiday did not stop China from activities that infringe on Taiwan’s maritime jurisdiction, but the CGA is ready to defend the nation, Kuan Bi-ling said Beijing is intensifying maritime pressure on Taiwan, but the nation will never yield, Ocean Affairs Council Deputy Minister Sung Chen-en (宋承恩) said.
The Coast Guard Administration (CGA) has adopted a “shadowing and monitoring” approach to avoid falling into a Chinese trap to escalate tensions and deepen the conflict, Sung said in an interview published yesterday in the Chinese-language Liberty Times (the Taipei Times’ sister newspaper).
China Coast Guard formations patrolling waters east of Taiwan, as well as official Chinese vessels entering areas around Itu Aba Island (Taiping Island, 太平島) and Pratas Islands (Dongsha Islands, 東沙群島) show Beijing’s attempts to significantly step up Taiwanese firms’ China investments have dwindled to less than 1 percent of their total foreign investments, putting China-based investments on track for a record low this year, Ministry of Economic Affairs data showed.
Taiwan’s investments abroad in the first five months of this year reached US$35.92 billion, Department of Investment Review data showed. Investments outside China totaled US$35.61 billion, up 133.94 percent year-on-year, while investments in China totaled US$310.
3 million, down 32.3 percent and about 0.86 percent of the total, data showed. Major overseas projects included Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) US$30 billion capital injection into an overseas subsidiary, VARYING OPINIONS: People with different political affiliations have different views on how bilateral ties with the US, Japan and China would affect Taiwan’s security Two-thirds of Taiwanese view closer US and Japan ties as beneficial to security, a survey by Taiwan’s top military think tank showed.
To gauge the Taiwanese public’s perceptions of how different external relationships affect security, the Institute for National Defense and Security Research commissioned a survey by National Chengchi University’s Election Study Center asking respondents whether closer relations with the US, Japan and China would strengthen or weaken Taiwan’s national security.