Fuel shock has mild impact on India’s inflation

Pressures may rise if W Asia conflict persists, says Crisil

Despite a sharp surge in global energy prices triggered by the ongoing West Asia conflict, the impact on India's retail inflation has remained limited so far, according to a report by Crisil Intelligence.

"Despite a full month since the onset of the conflict, retail inflation showed a relatively low impact of the energy shock," noted the report.

The report noted that although Brent crude prices rose about 45% in March and international natural gas prices jumped nearly 69% compared with February, the pass-through to domestic retail inflation has been muted.

India's Consumer Price Index (CPI)-based inflation edged up to 3.4% in March from 3.2% in February, primarily due to a rise in food and fuel prices. However, the broader impact of the global energy shock remained contained. The report highlighted that government measures helped cushion consumers from rising global fuel costs. Retail prices of petrol and diesel were largely kept unchanged, while excise duty cuts announced in late March further shielded households from price pressures.

Core inflation remained stable at 3.7%, indicating that second-round effects of higher energy prices are yet to materialise.