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Supply Shock
A supply shock is an unexpected event, such as a war, drought or blocked shipping route, that sharply reduces supply. Prices rise even though demand has not changed, often pushing up inflation while slowing growth.
Why It Matters
Interest rate hikes cannot fix a supply shock, because they cannot create more of what is missing.
In India
The 2026 disruption of the Strait of Hormuz was a supply shock for India’s oil and gas, and the weak monsoon was another for its food.
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