Transcription
Later on in our presentation, as well. In terms of inflation again, given this scenario, we are expecting a sharp increase upwards, and thereafter, it's settling in a month over to. We are not seeing a major risk in inflation, similar to what we were seeing before. So, pre-conflict, our average was at about 2.9%, and in this scenario, by considering an average of about 3.1%. So, in terms of price increases, of course, we have seen fall prices already, seeing an upward adjustment once things taper off. We could see a slight reduction in which we factored in again into the forecast for the second quarter of this year. But we could see, for example, electricity tariffs being a little bit higher. There is already a tariff hike that was kind of on the cards. So, this could maybe increase that proportion by a little bit more. But in terms of timing of that, it might happen around the middle of the year, based on the revision cycles. And that's where we factored this in coming in as well, and of course, we have already seen some increase coming in from the LPG gas price increases, as well. So, overall, we are still looking at inflation averaging at about 3.1% under this scenario, as well.
And so, to talk through what we would probably consider a more worst-case scenario. What happens if this conflict gets prolonged? Whether trade is closed for long, where we may be finding alternative routes for sourcing. But of course, it takes a lot more time and at a much more elevated costing. This, of course, means that we would be moving into a current account deficit, elevated inflation levels, and of course, a lot more pressure, particularly on the exchange rates. As you know, the reason that we have seen a lot more stability on the exchange rate is the fact that we have been running a very good current account surplus thus far, and that was our expectation going into this year as well. But if, for example, crude stays above $100 a barrel, we are looking at a move into a current account deficit. And this scenario that we factored in here, showing you on the graph on the left, is only with regards to change in the crude oil prices. But if, for example, we see continuous reduction in terms of tourism, increase in prices of our imports, overall, this, of course, has further impacts beyond this as well.
So, what you could be looking at in a worst-case scenario is potentially current account deficits in excess of one and a half billion to two billion. In terms of inflation in this kind of scenario, we are looking at it averaging probably over 4%, four to 5% is a potential if we see that translating into further exchange rate pressure as well, beyond what we have factored into our current scenario. So, our base case scenario for this year, when we started off, was that we would end the year at an exchange rate of 320 for this year. And if, and we do think that if this conflict does kind of ease off over the next couple of weeks, that view would still remain intact. But if this does prolong, we could see much greater pressure in terms of the currency as a result of us moving into a current account deficit.
So, that is our overall view right now in terms of the macroeconomic implications. And I would like to pass it on to Sujit to talk a little bit more about the impact on listed equities. But before moving into that, I would like to remind you that we will have a Q&A session at the end. So, if you have any questions, please send it in either to the chat or to the Q&A box.