Finance Minister Nirmala Sitharaman stated in Parliament that the recent increase in global crude oil prices is not expected to significantly affect India’s inflation due to the country’s inflation being near the lower limit. She mentioned that although the price of crude oil India imports rose from $69.01 to $80.16 per barrel between late February and early March 2026, the impact on inflation is currently deemed minimal.
Sitharaman highlighted that global crude prices started rising after military actions between the US, Israel, and Iran began on February 28. She explained that the Reserve Bank of India’s (RBI) Monetary Policy Report from October 2025 had projected a potential 30 basis points increase in inflation if crude oil prices were 10% higher than baseline assumptions with full pass-through to domestic prices.
The Finance Minister emphasized that the medium-term effect of the global crude oil price surge on inflation will be influenced by various factors like exchange rate fluctuations, global demand and supply dynamics, monetary policy transmission, overall inflation levels, and the extent of indirect price adjustments. She noted a decline in average retail inflation from 5.4% in 2023-24 to 1.8% in 2025-26 (April-January), with January 2026 headline inflation standing at 2.75%, close to the lower limit of the RBI’s inflation tolerance range of 4% to 2%.
To manage inflation, the Monetary Policy Committee (MPC) has collectively reduced the policy rate by 125 basis points since February 2025, Sitharaman informed. Additionally, the government has implemented various measures such as bolstering buffer stocks for essential food items, conducting strategic sales of procured grains, facilitating imports, imposing export restrictions during shortages, and introducing fiscal initiatives like exempting annual incomes up to Rs 12 lakh from income tax to provide relief to the middle class. Moreover, GST rates have been slashed across categories to make goods and services more affordable for consumers.
