New Delhi, Mar 9 (KNN) Finance Minister Nirmala Sitharaman informed Lok Sabha that the recent rise in global crude oil prices following geopolitical tensions in West Asia is not expected to significantly impact inflation in India at present.
Responding to a question, the minister said global crude oil prices had been on a declining trend over the past year until clashes began in West Asia on February 28, 2026.
During this period, the Free on Board (FOB) price of the Indian crude oil basket increased from USD 69.01 per barrel at the end of February to USD 80.16 per barrel by March 2, 2026.
She noted that with inflation currently near the lower bound of the target range, the immediate impact of rising crude prices on inflation is expected to be limited.
According to the Reserve Bank of India (RBI) Monetary Policy Report released in October 2025, a 10 per cent increase in crude oil prices, assuming full pass-through to domestic prices, could raise inflation by around 30 basis points.
The minister added that the medium-term impact of higher global crude prices on inflation would depend on multiple factors, including exchange rate movements, global demand and supply conditions, monetary policy transmission and the extent of indirect pass-through to domestic prices.
Sitharaman further informed the House that average retail inflation, measured by the Consumer Price Index (CPI), declined from 5.4 per cent in 2023–24 to 4.6 per cent in 2024–25, and further to 1.8 per cent during April 2025–January 2026.
Headline inflation in January 2026 stood at 2.75 per cent, close to the lower bound of the RBI’s inflation tolerance band of 4 per cent ± 2 per cent.
She also highlighted that the Monetary Policy Committee has reduced the policy rate by 125 basis points since February 2025 as part of inflation management efforts.
In addition, the government has taken several administrative measures, including strengthening buffer stocks of essential food items, facilitating imports and restricting exports during shortages, imposing stock limits, and conducting market interventions for agricultural commodities.
Other steps include subsidised retail sales of select food items under the Bharat initiative, reduction in fuel taxes, expansion of storage capacity, and measures to increase disposable income through tax exemptions and rationalisation of Goods and Services Tax rates, the minister said.
(KNN Bureau)
