Bank of Baroda Essential Commodities Index rises for third straight month; imported inflation risks loom

India’s essential commodity prices continued to show upward momentum, with the Bank of Baroda’s Essential Commodities Index, adjusted for a new base year, rising for the third consecutive month. The index increased 0.7% year-on-year (YoY) in March 2026 and is already up 1% YoY in the first five days of April, according to a report by Bank of Baroda . 

The latest uptick has been driven by rising prices of edible oils, select pulses, and tomatoes, reflecting both domestic and global price pressures. The report noted that while the direct transmission of global prices to consumer inflation remains limited, risks of imported inflation are increasing amid elevated energy prices and a weaker currency. 

Against this backdrop, retail inflation (CPI) is expected to settle at around 3.7% in March 2026, with risks tilted to the upside, particularly due to ongoing geopolitical uncertainties and supply disruptions. 

Food prices under pressure 

Among the 20 commodities tracked, 12 recorded higher inflation in March. The sharpest increases were seen in edible oils—such as soy and sunflower—and pulses including tur, urad, and gram. While pulses continue to remain in a deflationary zone overall, the pace of decline has slowed, except for masoor dal. 

The rise in edible oil prices mirrors global trends, with international prices firming up across palm, soy, sunflower, and rapeseed oils, partly due to supply disruptions and higher crude oil prices. This has raised concerns about sustained elevation in domestic edible oil prices. 

Vegetable prices presented a mixed trend. While potato and onion prices remained in deflation, tomato prices surged sharply, rising 33.3% YoY in March. On a sequential basis, the index edged up 0.1% in March, with tomatoes, edible oils, milk, and masoor dal contributing to the increase. 

In early April, the index has risen further by 0.2% month-on-month (MoM), indicating continued price pressures. 

Supply constraints and fuel costs add to concerns 

Supply-side pressures remain visible, particularly in food items. Arrivals of key vegetables—tomato, onion, and potato—declined 53.8% YoY in March, raising concerns of further price pass-through to retail markets. The gap between wholesale and retail prices is also narrowing, suggesting an imminent increase in consumer prices. 

Fuel-related inflation is also expected to inch higher. LPG prices rose 7% in March (1.98% MoM), while subsidised kerosene prices also increased in metro cities, pushing up the housing and utilities component of CPI. 

Additionally, FMCG and consumer durable companies are beginning to factor in rising input costs, indicating broader inflationary pressures across sectors. 

Global cues and geopolitical risks 

Global commodity trends remain a key risk factor. According to World Bank data, upside risks are concentrated in energy, edible oils, and fertiliser prices. While metal prices softened sequentially in March, they remain elevated on a YoY basis. 

Food prices globally are currently range-bound, but second-round effects cannot be ruled out. Data from the FAO also indicates firming trends across key food components such as cereals and vegetable oils. 

Core inflation (excluding food and fuel) is expected at around 3.9% in March, while a narrower measure excluding volatile components like gold and tobacco is seen at 1.7–1.8%. A decline in gold prices—down 3.3% MoM—has provided some relief, supported by a stronger dollar.