March 12 (Reuters) – India’s retail inflation rose to 3.21% year-over-year in February, driven by higher prices of food, personal care products and precious metals, government data showed on Thursday.
A Reuters poll had projected inflation at 3.10%.
COMMENTARY
ADITI NAYAR, CHIEF ECONOMIST, ICRA LTD, GURUGRAM
“ICRA expects the YoY inflation in the F&B segment to ease marginally in March 2026 from 3.4% in February 2026. However, the hike in prices of domestic (non-subsidised) and commercial LPG cylinder prices in early-March 2026, owing to global energy supply disruptions, would exert upward pressure on inflation prints for the electricity, gas & other fuels, and restaurant & accommodation divisions in this month. These, along with continued hardening in average prices of precious metals such as gold, would push up the headline CPI inflation to ~3.3-3.5% in March 2026.
The ongoing geopolitical tensions in West Asia pose upside risks to the CPI inflation trajectory, if sustained for an extended period; as per ICRA’s analysis, every 10% increase in average crude oil prices increases the CPI inflation by 40-60 bps, assuming that a full transmission into retail selling prices (RSPs) of auto fuels takes place.
Additionally, elevated crude oil prices would weigh on India Inc.’s profitability and household spending, posing downside risk to our GDP growth forecast of 7.1% for FY2027.”
VIKRANT CHATURVEDI, ASSOCIATE DIRECTOR – RESEARCH, BRICKWORK RATINGS, MUMBAI
“Core inflation, excluding food and energy, is estimated near 3.4%, signalling contained demand-side pressures in housing, health, and communication. This divergence between food and precious metals volatility versus relatively stable core highlights that while headline prints remain sensitive to supply shocks and asset price surges, underlying inflation dynamics are still benign.
From a monetary policy perspective, this mix should allow the RBI to remain patient, balancing growth support with vigilance on food and commodity-driven spikes. Having said that, the U.S.–Iran conflict and rising crude oil prices pose upside risks through fuel and input-cost channels.
For credit markets, the persistence of low and stable core inflation strengthens household purchasing power and corporate debt-servicing capacity, reinforcing sovereign and corporate credit profiles even as food and bullion prices remain the swing factors in the near term.”
SUJAN HAJRA, CHIEF ECONOMIST & EXECUTIVE DIRECTOR, ANAND RATHI GROUP, MUMBAI
“Core inflation remained broadly stable at 3.4%, indicating that the underlying price trend remains moderate. The recent spike in oil and gas prices raises some upside risks to inflation in the coming months. However, these pressures are likely to be transitory. If anything, the RBI may respond with a more accommodative liquidity stance to smoothen financial market volatility arising from geopolitical uncertainties.
The latest inflation print may nevertheless have mildly negative near-term implications for the debt, equity and foreign exchange markets.”
KUNAL KUNDU, INDIA ECONOMIST, SOCIETE GENERALE, BENGALURU
“Adjusting for gold and silver, however, India’s super core inflation appears far more contained (suggesting rather benign domestic demand conditions) at an estimated 2.2%.
Looking ahead, inflation risks are clearly tilting upward as the conflict in Iran disrupts global supply chains and propels energy prices higher, prompting us to push back our expected rate cut timeline from 2Q26 to 3Q26, while maintaining that the policy path remains entirely data dependent.”
RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE
“Inflation numbers are close to expectations, as disinflation in food continues to ease even as precious metals gain. In the wake of the Middle East crisis, pipeline inflationary risks are in focus on potential upside pressure on cooking gas prices, industrial fuels and derivative products/ segments. These pressure points, coupled with a softer rupee, are expected to result in an extended pause by the policy committee.”
DEVENDRA PANT, CHIEF ECONOMIST, INDIA RATINGS AND RESEARCH, NEW DELHI
“Upward movement in food prices continued in the month of March 2026. This, coupled with higher crude and petroleum products prices are expected to push retail inflation in March 2026 to 3.7%. Despite an increase in crude and petroleum product prices, retail prices of petrol and diesel have not been revised, and these are expected to remain at this level for some more time. The RBI will remain watchful and expect a long pause on policy rates.”
MADHAVI ARORA, CHIEF ECONOMIST, EMKAY GLOBAL FINANCIAL SERVICES, MUMBAI
“We continue to track FY27 inflation as a base case of $70/bl at around 4.0-4.1%, assuming the West Asia war doesn’t scale beyond another month. However, further dragging of the war could severely impact macro dynamics. The eventual balance sheet, fiscal and inflationary impact will hinge on how the burden is shared between the OMCs, govt (via a cut in oil duties and increase in subsidies), and end-consumers (via price hikes).
The retail inflation may bear ~40bps annualised basis impact, for every $10/bbl increase in crude prices with full pass through to pumps. However, the pass through coefficient is low, given OMCs and govt absorb a fair share of the pain of oil price hikes and cushion consumers.”
SUVODEEP RAKSHIT, CHIEF ECONOMIST, KOTAK INSTITUTIONAL EQUITIES, MUMBAI
“Inflation continues to be benign and evolving as per expectations. More than the current print, the next few months’ prints will be keenly watched to factor in any impact of the West Asia crisis. We do not expect an immediate impact on inflation, but a prolonged disruption could have knock-on effects. RBI, while staying on pause, in April, is likely to be watchful of inflationary risks as well as growth slowdown risks in FY2027.”
(Reporting by Aleef Jahan, Anuran Sadhu, Meenakshi Maidas, Kashish Tandon, Mridula Kumar, Chandini Monnappa, and Urvi Dugar, editing by Harikrishnan Nair)
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