Oil Price Risks Emerge, India's February Consumer Inflation Rate Rises to 3.21%

Key Points

• India’s February inflation rate rose from 2.75% in January to 3.21%.
• The data is largely in line with market expectations of a 3.1% increase in the Consumer Price Index (CPI).
• This is the second release of CPI data based on the revised data series, with the base year adjusted from 2012 to 2024 to reflect changes in consumption patterns.

On March 11, 2026, in Guwahati, India, fuel nozzles hang at gas stations. After U.S. President Trump commented on the Iran conflict, oil prices retreated from recent highs to around $90 per barrel. Traders are closely monitoring the evolving geopolitical situation, and markets remain volatile.

India’s consumer inflation for February increased for the fourth consecutive month, rising from 2.75% in January to 3.21%.

A Reuters survey indicates that this overall inflation data aligns with economists’ expectations of a 3.1% rise in the Consumer Price Index.

Data released by India’s Ministry of Statistics and Programme Implementation on Thursday show that food inflation in February increased by 3.47% year-on-year, up from 2.13% in January.

This is the second CPI data release based on the revised data series, with the base year changed from 2012 to 2024 to better reflect consumption pattern shifts.

In a statement in February, the Indian government said the base year adjustment was due to “significant structural changes in consumption behavior, income levels, urbanization, service sector expansion, and digitalization.”

The Reserve Bank of India (RBI), in its latest monetary policy meeting on February 5, projected inflation for the current fiscal year at 2.1%, adding that the short-term outlook for food supply remains “optimistic.”

However, experts note that while inflation is expected to stay within the RBI’s target range of 2% to 6%, ongoing conflicts in the Middle East are unlikely to trigger policy adjustments.

Imminent Energy Crisis

The U.S.-Israel conflict with Iran has disrupted a key global energy trade route—the Strait of Hormuz—threatening India’s crude oil and liquefied petroleum gas (LPG) supplies.

A report from the Indian government on Wednesday stated that approximately 30% of India’s crude oil and 90% of LPG imports currently transit through the Strait of Hormuz.

Although households have not yet faced cooking fuel shortages, prices have begun to rise. Due to supply prioritization for domestic use, many hotels and restaurants using commercial LPG cylinders face the risk of closure.

Global broker Nomura said in a report on Wednesday that under the new GDP and CPI data series, India’s “ideal state” of high growth and low inflation continues, but “faces challenges from rising crude oil prices and fuel shortages.”

The report added that the “high oil prices” driven by Middle East instability could curb the Reserve Bank of India’s easing stance. “We expect the central bank to keep the current policy rate unchanged.”

Since the U.S.-Israel conflict with Iran began, global oil prices have surged, with Brent crude reaching $100 per barrel earlier today.