‘Global crude price rise not to have substantial impact on inflation’

New Delhi: The impact of global crude price rise on inflation is not estimated to be substantial at this point as India’s inflation is near the lower bound, Finance Minister Nirmala Sitharaman said on Monday.

In reply to a written question in the Lok Sabha, Sitharaman said the price of both global crude oil and the Indian basket has been on a declining trajectory for the past one year, till the geo-political clashes commenced in West Asia on February 28, 2026.

“Between the end of February and untill March 2, 2026, the Crude Oil FOB Price (Indian Basket) rose from $69.01/barrel to $80.16/barrel. Given that India’s inflation is near the lower bound, the impact on inflation is not estimated to be substantial at this point,” Sitharaman said.

She was replying to a question on whether the government has reviewed the impact of rising global crude oil prices on inflation in the country. Global crude prices have been rising since February 28 when the US and Israel launched military strikes on Iran who retaliated with attacks on US positions in the region, as well as Israel.

Replying to the question, the minister said that RBI’s Monetary Policy Report in October 2025, had estimated that if crude oil prices are higher by 10 per cent than the baseline assumptions, and assuming full pass-through to domestic prices, inflation could turn out to be higher by 30 basis points.

However, the medium-term impact of the global crude oil price rise on inflation depends on several factors, including exchange rate movements, global demand and supply situation, monetary policy transmission, the state of general inflation, and the extent of the indirect pass-through.

The average retail inflation measured by the Consumer Price Index declined from 5.4 per cent in 2023-24 to 4.6 per cent in 2024-25 and further to 1.8 per cent in 2025-26 (April – January).

The headline inflation for January 2026 stood at 2.75 per cent and is near the lower bound of the RBI’s inflation tolerance band of 4 per cent ± 2 per cent.

As part of inflation management, the Monetary Policy Committee (MPC) has reduced the policy rate by 125 basis points cumulatively since February 2025, Sitharaman said.

Further, the government has also undertaken a series of administrative measures, including fiscal and trade policy, to control inflation and mitigate its impact on the common citizen.

These include, inter alia, augmentation of buffer stocks for essential food items, strategic sales of procured grains in the open market, facilitation of imports and export curbs during periods of short supply, implementation of stock limits to push more supplies of select commodities into the market, retail sales of select food items under the Bharat brand at subsidised rates, market intervention for perishable horticultural and agricultural commodities, reduction in fuel taxes, creation of scientific storage capacity.

Also, the government has increased the disposable income of individuals by exempting annual incomes up to Rs 12 lakh (and Rs 12.75 lakh for salaried individuals with standard deduction) from income tax and the recent rationalisation of Good and Services Tax (GST) rates.