Global Inflation Trends and Their Effect on Indian Equities
We hear about past global inflation stories in the news and publications quite often. The discussion around it increases when the cost of general items starts going up. Inflation simply means an increase in the price of goods and products over time, impacting the livelihood of general users.
The Organisation for Economic Co‑operation and Development (OECD) reports that average inflation across its member countries was 4.0% in May 2025, its lowest in years. Meanwhile, in India, retail inflation fell to a very low 1.54% in September 2025, the lowest in about eight years.
Global inflation matters to India because the price rise in foreign markets will lead to a price increase here in our country too. It impacts our home economy and stock market, with an influence on all kinds of daily usage items.
What’s Causing Global Inflation?
Global inflation happens because of several reasons, such as geopolitical conflicts, trade battles, wars, etc. Such events impact the global trade routes and increase costs, driving worldwide inflation.
Another potential reason behind inflation is also due to supply chain disruptions. For example, during the pandemic, the shortage of raw materials and essential supplies led to an increase in price.
How Global Inflation Affects India
Even though our nation isn’t behind the inflation, we are surely impacted by more imported prices. This leads to a sharp increase in fuel charges, production expenses, logistics charges, etc.
In some cases, global inflation can benefit the Indian export business with high returns on investment. However, this can be temporary as inflation reduces demand abroad as well.
Impact on Indian Stock Markets
The rise in global inflation is a great concern for Indian investors too. A quick increase in prices and interest rates reduces daily spending, affecting the company’s profits and investors’ decisions.
Inflation can affect India in multiple ways, such as an increase in business costs, lower margins, and reduced overall investor confidence. Mostly Indian investors keep an eye on the global inflation trends to make their next investment decisions.
However, the Indian economy’s stability during inflation purely relies on how well we manage it at home.
Sectors Most Affected By Global Inflation
Out of all sectors, the information technology vertical relies on global-scale clients. With a slow foreign economy, inflation will lead to less project demand and revenue. On the same lines, the rise in FMCG prices led to a reduction in consumer spending.
Inflation also leads to a rise in raw material and transport costs, causing production expenses in the manufacturing sector. A similar rise in price is also expected in the energy and oil sector. Another sector coming under fire is banking and finance, with the possibility of higher interest rates impacting borrowing and lending activity.
What It Means for General Indians
Indians experience inflation here with higher fuel prices, expensive groceries, and import charges. Common daily household things such as travel, food, and housing also become expensive.
Global inflation impacts the savings and investment ability of general users. Since the value of money decreases, people are likely to get fewer valuable items from saving money.
Conclusion
Global inflation tells us that the entire world’s economies are somehow connected to each other. No matter if there are certain things happening abroad, the same can have an impact on Indian markets and stocks too.
The smart move is to stay updated with the inflation trends and make better financial choices. If we have domestic demand and better policies in place, the influence of global inflation can be handled to a certain extent.
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This analysis is for informational purposes only. Please consult a SEBI-registered financial advisor before investing.
– Chandan Pathak
Equity Research Analyst, StockYaari