Consumer inflation in India rose for the fourth consecutive month in February, reaching 3.21 percent year-on-year, as concerns grow over potential energy supply disruptions linked to tensions in the Middle East.
Data released Thursday by the Ministry of Statistics and Programme Implementation showed inflation had increased from 2.75 percent recorded in January.
The figure was broadly in line with expectations from economists surveyed by Reuters, who had forecast a reading of around 3.1 percent.
Food prices contributed to the rise, with food inflation climbing to 3.47 percent in February from 2.13 percent the previous month, according to the government data.
The latest reading marks the second consumer price index (CPI) release under India’s revised inflation series, in which the base year was changed to 2024 from 2012 to better reflect evolving consumption patterns.
Authorities said the change was necessary because of “significant structural changes” in the economy, including shifts in consumption behaviour, rising incomes, urbanisation, expansion of the services sector and increased digitalisation.
Despite the recent uptick, inflation remains well within the target range set by the Reserve Bank of India, which aims to keep consumer inflation between two and six percent.
At its last monetary policy meeting on February 5, the central bank projected inflation of around 2.1 percent for the current financial year, noting that food supply prospects remain favourable in the near term.
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However, economists warn that rising geopolitical tensions and higher global energy prices could complicate the inflation outlook in the coming months.
The conflict involving Iran has disrupted maritime traffic in the Strait of Hormuz, a key route for global oil and gas shipments and an important supply corridor for India’s energy imports.
Government estimates show that roughly 30 percent of India’s crude oil supplies and around 90 percent of its liquefied petroleum gas (LPG) imports pass through the strategic waterway.
Any prolonged disruption could therefore pose a significant risk to the country’s energy security.
Although households have not yet experienced major shortages of cooking fuel, prices have begun to rise as supply pressures increase.
Some hotels and restaurants that rely on commercial LPG cylinders have reportedly been forced to suspend operations as available supplies are being redirected to household consumers.
Analysts say the situation could challenge India’s recent economic narrative of strong growth accompanied by relatively low inflation.
In a research note published this week, analysts at Nomura said the country’s “Goldilocks” economic conditions — characterised by steady growth and contained inflation — could come under pressure from rising crude oil prices and potential fuel shortages.
Global oil prices have surged since the start of the U.S.-Israeli military campaign in Iran, with benchmark crude prices climbing toward $100 per barrel earlier on Thursday.
Elevated energy costs could limit the ability of the Reserve Bank of India to ease monetary policy in the near term, analysts said.
Nomura expects the central bank to keep interest rates unchanged for now, noting that sustained increases in oil prices would likely force policymakers to adopt a more cautious stance.
For the moment, inflation remains moderate by historical standards, but economists say the trajectory of global energy markets — particularly developments around the Strait of Hormuz — will play a crucial role in shaping India’s economic outlook in the months ahead.
