Crisil Economy First Cut: Rising steadily

India’s Consumer Price Index (CPI) series rose to 3.4% in March from 3.2% in February, driven by upticks in both food and fuel inflation. While food inflation rose on a low base, the uptick in fuel was driven by the increase in domestic cooking fuel prices.

However, despite a full month since the onset of the conflict, retail inflation showed a relatively low impact of the energy shock. Brent crude oil spot prices rose 45% in March, while international natural gas prices soared ~69% compared with February.

Cooking fuel prices saw some price pressures – the price of domestic LPG cylinders was increased by Rs 60 in early March, while the government kept retail prices of petrol and diesel (combined weight of 4.8% in CPI) largely unchanged, choosing to absorb the price pressures itself. In April so far, consumers have been shielded from the rise in energy prices with the government announcing a cut in excise duty on petrol and diesel starting late March.

Core inflation, too, remained contained as second-round effects stemming from higher energy prices are yet to play out. Furthermore, slower gold and silver inflation (in line with the correction in global prices and a high base) also lent support.

The March data brings the average headline inflation print to 2.0% in fiscal 2026 from 4.6% in the previous fiscal.