The Impact of world Supply Shocks

In a world divided between war and globalization, the food and supply chain has been severely disrupted.

The Indian Finance Minister warned that countries worldwide need to think about where they will source their food. They must focus on creating regional stability and be mindful of global risks in the supply of grains and essential commodities.

The Governor of the Reserve Bank of India, expressed concern later on about the repeated incidents of significant supply shocks that affect inflation rates and pose a risk to monetary policy credibility. Therefore, it is necessary to take steps to ensure the prudence and necessity of monetary policy.

Frequent supply shocks affecting inflation rates lead to a loss of credibility in monetary policy and an increase in the unpredictability of inflation estimates.

Without price stability, sustainable growth and employment benefits cannot be achieved due to the shortage of purchasing power.