Global crude price rise unlikely to significantly impact India’s inflation, says finance minister

Summary

Finance Minister Nirmala Sitharaman said India is unlikely to face a major inflationary impact from the recent rise in global crude oil prices, citing moderating inflation trends and policy buffers.

NEW DELHI, March 9, 2026 — India is unlikely to face a substantial inflation surge from the recent spike in global crude oil prices, Finance Minister Nirmala Sitharaman said in a written reply to Parliament on Monday.

The minister noted that headline inflation remains close to the lower bound of the Reserve Bank of India (RBI) tolerance band, providing a cushion against volatility in energy markets.

Sitharaman said global oil prices, which had been easing for much of the past year, reversed course after tensions escalated in West Asia in late February.

Limited near-term inflation impact

According to official data cited by the minister, the Free on Board (FOB) price of the Indian crude oil basket rose from $69.01 per barrel at end-February to $80.16 per barrel by March 2, representing an increase of roughly 16%.

Despite the rise, Sitharaman said the immediate effect on consumers is expected to remain limited given current macroeconomic conditions.

RBI projections and policy buffers

Referring to the RBI’s October 2025 Monetary Policy Report, the minister said a 10% increase in crude prices — if fully passed through — would raise inflation by about 30 basis points.

However, she emphasized that India’s current disinflation trend offers room for policy flexibility:

• Retail inflation: Averaged 1.8% between April 2025 and January 2026, down from 4.6% in 2024–25.
• January 2026 inflation: Stood at 2.75%, within the RBI’s 4% ±2% target band.
• Policy stance: Under Governor Sanjay Malhotra, the Monetary Policy Committee has cut the repo rate by 125 basis points since February 2025 to 5.25%.

Fiscal and administrative support

Beyond monetary policy, Sitharaman highlighted government interventions including subsidized “Bharat”

 brand retail food sales and buffer stock management for essential commodities.

She also pointed to tax changes in the Union Budget 2025–26, including zero income tax for individuals earning up to ₹12 lakh annually (₹12.75 lakh for salaried taxpayers after standard deduction), as supporting household purchasing power.

Why this matters

• Inflation outlook stability: The remarks suggest policymakers expect manageable inflation risks despite global oil volatility.
• Policy flexibility: Moderate inflation gives the RBI room to balance growth and price stability if energy prices remain elevated.
• Consumer confidence: Assurances from the finance ministry may help temper inflation expectations and market volatility.
• Geopolitical sensitivity: India remains exposed to energy shocks, but diversified supply sources and policy tools provide resilience.

FAQs

Q1. How much did the Indian crude basket rise recently?

It increased from $69.01 per barrel at end-February to $80.16 by March 2, 2026.

Q2. What is the current RBI repo rate?

The repo rate stands at 5.25% following cumulative cuts since early 2025.

Q3. What is the income tax exemption limit mentioned?

Under the FY2025–26 regime, income up to ₹12 lakh (₹12.75 lakh for salaried taxpayers) is tax-free.

Q4. What is the RBI’s oil-inflation estimate?

A 10% rise in crude prices is estimated to add roughly 30 basis points to inflation if fully passed through.