India does not expect the recent surge in global crude oil prices to significantly push up inflation at this stage, the government said on Monday, even as oil markets spiked following the escalation of the West Asia conflict.
Oil markets have turned volatile after tensions escalated in the region following joint military action by the United States and Israel against Iran, raising concerns about disruptions to global energy supplies. Oil prices surged sharply earlier on Monday as traders reacted to fears of supply disruptions in West Asia, one of the world's most important energy-producing regions. Crude prices had earlier on Monday spiked close to $120 per barrel in the largest intraday jump on record before easing from the highs later in the session.
Despite the sharp move in global oil prices, Finance Minister Nirmala Sitharaman said the impact on India's inflation is not expected to be substantial at present.
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In a written reply in the Lok Sabha, the government said the price of the Indian crude basket rose from $69.01 per barrel at the end of February to $80.16 per barrel by March 2, after geopolitical clashes began in West Asia on Feb. 28. The government said inflation in India is currently close to the lower bound of the Reserve Bank of India's tolerance band, limiting the immediate impact of higher crude prices on overall price levels.
The government said the medium-term impact of rising crude prices on inflation will depend on several factors, including exchange rate movements, global supply and demand conditions, the transmission of monetary policy and the extent to which higher global prices pass through to domestic fuel costs. Previously, the Reserve Bank of India had estimated that if crude oil prices are 10% higher than baseline assumptions and the increase is fully passed through to domestic prices, inflation could rise by around 30 basis points.
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Inflation Trend
Recent data show inflation in India has moderated over the past two years.
Average retail inflation measured by the Consumer Price Index declined from 5.4% in 2023-24 to 4.6% in 2024-25, and further to 1.8% during April–January of 2025-26, the government said. Headline inflation for January 2026 stood at 2.75%, near the lower end of the Reserve Bank of India's tolerance band of 4% ± 2%.
The government said it has used a mix of fiscal, administrative and trade measures to manage inflation. These include maintaining buffer stocks of essential food items, releasing grains in the open market, easing imports and restricting exports during supply shortages, and selling select food items at subsidised rates under the Bharat brand.
Officials said the trajectory of inflation will depend in part on how global energy markets evolve as tensions in West Asia continue.
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