New Delhi, March 9: Finance Minister Nirmala Sitharaman stated in Parliament on Monday that the recent increase in global crude oil prices is not expected to significantly impact inflation in India, as the country’s inflation rate is currently near its “lower limit.”
Responding to a question in the Lok Sabha, Sitharaman noted that the price of crude oil imported by India had been declining for the past year until geopolitical tensions in West Asia escalated on February 28, 2026.
She explained, “From the end of February to March 2, 2026, the price of crude oil (Indian basket) rose from $69.01 per barrel to $80.16 per barrel. Given that inflation in India is at a low level, its impact is not anticipated to be significant at this time.”
The rise in global crude oil prices follows military actions by the United States and Israel against Iran, which began on February 28. The conflict has since spread to the Middle East, with Iran retaliating through drone and missile strikes on all U.S. bases in the region.
In response to another query, the central minister mentioned that the Reserve Bank of India’s (RBI) monetary policy report from October 2025 projected that if crude oil prices exceed baseline estimates by 10%, inflation could rise by up to 30 basis points, fully reflecting on domestic prices.
She further stated that the medium-term impact of rising global oil prices on inflation depends on several factors, including exchange rate fluctuations, global demand and supply conditions, monetary policy transmission, overall inflation levels, and the extent of indirect effects.
The average retail inflation measured by the Consumer Price Index is expected to decrease from 5.4% in 2023-24 to 4.6% in 2024-25, and further down to 1.8% in 2025-26 (April-January).
For January 2026, the core inflation rate stood at 2.75%, close to the lower limit of the RBI’s inflation tolerance band (2% to 4%).
Sitharaman mentioned that under inflation management, the Monetary Policy Committee (MPC) has cumulatively reduced the policy rate by 125 basis points since February 2025.
She added that the government has implemented various measures to control inflation and mitigate its impact on the common citizen. These include increasing buffer stocks of essential food items, strategic sales of grains purchased in the open market, facilitating imports, and imposing export restrictions during supply shortages.
Additionally, the government has introduced fiscal measures such as income tax exemptions for annual incomes up to ₹12 lakh (and ₹12.75 lakh for salaried individuals) to provide the middle class with more disposable income. GST rates have also been reduced to make goods and services more affordable for consumers.
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