The second reading of the new CPI series noted a rise in retail inflation to 3.21% in February 2026 from 2.75% in the previous month, and also stood marginally higher than Bloomberg poll (median at 3.14%) Food inflation increased to 3.35% from 2.11% in the previous month. Combined food and housing component (including rent, water, electricity, gas & other fuels) contributed about ~47% to the retail inflation in February 2026. Also, personal care, social service & miscellaneous goods & services which also includes jewellery contributed a larger share of ~31%.

Global Oil Prices Continue To Rise, Domestic Fuel Prices Largely Contained As Of Now

Global oil prices continue to be extremely volatile with sharp price swings observed since the US-Iran war began. Currently, Brent oil prices are currently hovering closer to USD 97/bbl, up ~34% since the war broke on February 28, 2026. The new CPI series account for ~6.8% of weight towards fuel including gas. As of now, pertrol/diesel prices have not been increased with OMCs largely absorbing the impact. However, household LPG prices have been increased by Rs. 60 while commercial LPG saw a higher spike of around ~Rs. 115. There are parts of the country which have also started to witness LPG supply shortages especially in commercial space. India imports about 60-65% of LPG requirement with about 90% of that transiting through the Strait of Hormuz. That said, the government has been prioritizing household consumption over commercial usage while also stepping up domestic production to mitigate sustained shortages. Persistent rise in global oil prices would pose a major upside risk to domestic inflation.

Imported Inflation Could Rise In The Coming Months → Potentially Delaying Monetary Easing

Amidst the ongoing war, a depreciating INR along with rising global oil prices pose a significant risk of higher imported inflation as India imports ~90% of its domestic oil consumption. For now, OMCs are absorbing much of the cost pressure. However, if elevated prices persist, the burden will either need to be absorbed by the government through fiscal support or passed on to consumers through higher retail fuel prices. If the latter occurs, it could add further pressure on domestic retail inflation, which is already projected to average around 4.1% in H1 FY27. This could mean a potential delay in rate cuts which could dampen domestic growth.

Ionic Wealth View

India’s Retail Inflation Edged Higher To 3.21%, War Related Pressures Not Yet Reflected India’s retail inflation which has stayed below the RBI’s medium target of 4.0% for thirteen consecutive months now, could witness upward pressure due to a combination of factors. 1) Change in the base year last month, along with reduced weight for food & beverages by 9% could push inflation higher as food has been the primary driver of benign inflation trend in the last one year 2) Rising global oil prices could lead to higher domestic fuel prices, with potential second- and third-order effects across the broader CPI basket through transportation and input costs 3) Depreciating INR also poses as one of the major sources of inflation as India remains a net importer. In the upcoming policy, the RBI, given its mandate to maintain price stability could decide to keep interest rates unchanged, allowing more time to assess the evolving inflation dynamics both globally and domestically. Also, Fed action next week would be an important event to watch out for, as it would set the tonality for the rate action going forward under the new chair, particularly amid heightened global uncertainty due to the ongoing war. This view is for educational and informational purposes only and should not be construed as an investment advice.