Global crude spike won’t shake India’s inflation yet, says FM Sitharaman

Finance Minister Nirmala Sitharaman said in Parliament on Monday that current global crude oil prices have increased, but they will not drive inflation changes in India. She mentioned that current inflation rates in the country, which stay close to the minimum target limit, should not create urgent demands for higher oil prices.

India’s inflation currently near the target limit

The minister announced in the Lok Sabha that Indian crude oil import prices had decreased for almost twelve months. The prices experienced upward movement, which began after West Asian geopolitical tensions reached their peak on February 28 2026.

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The Indian crude oil price for its crude oil basket rose from $69.01 per barrel at the end of February to $80.16 per barrel on March 2 2026. Sitharaman stated that the current inflation impact from the price increase will not reach significant levels because current inflation rates remain low, IANS reported.

US–Israel strikes on Iran push global oil prices higher

Global crude oil prices began rising after military strikes by the United States and Israel on Iran on February 28. The Middle Eastern conflict escalated when Iran retaliated against US military bases in the region through drone and missile attacks.

The finance minister also referred to the Monetary Policy Report released in October 2025 by the Reserve Bank of India. The report states that a 10 per cent increase in crude oil prices above baseline levels will result in a 30-basis-point inflation increase in India if companies pass the complete price increase to their customers.

Multiple factors determine long-term inflation impact

Sitharaman explained that various elements will determine how rising global oil prices will impact inflation over the long term. The factors which affect this situation include exchange rate fluctuations, alterations in global supply and demand, central bank monetary policy decisions, current inflation levels and the extent to which domestic markets will absorb increased oil prices.

She presented new inflation statistics. The Consumer Price Index showed that average retail inflation decreased from 5.4 per cent in 2023-24 to 4.6 per cent in 2024-25. The rate further decreased to 1.8 per cent between April and January of the 2025-26 period.

The January 2026 headline inflation rate registered 2.75 percent which approached the lower boundary of the RBI inflation target range, which extends from 2 per cent to 4 per cent.

RBI cuts policy rates to support inflation management

The Reserve Bank of India Monetary Policy Committee has implemented 125 basis point reductions to the policy interest rate since February 2025 as a method to control inflation.

The government has implemented multiple measures that aim to restrict inflationary pressures while protecting citizens from its effects. The government maintains emergency food supplies as essential food stockpiles, and they sell grains through open markets during emergencies and they permit grain imports while they impose restrictions on grain exports to control market shortages.

The government has implemented fiscal policies that include income tax exemptions for annual earnings up to Rs 12 lakh and Rs 12.75 lakh for salaried workers to boost middle-class disposable income. The government has decreased GST rates on multiple products and services to assist customers with smaller expenses.