‘Inflation within manageable range’: FM Nirmala Sitharaman assures Rajya Sabha amid emerging oil price risks

Union Finance Minister Nirmala Sitharaman on Tuesday reiterated that inflation remains under control, even as she acknowledged concerns around the rising cost of living and evolving global risks.

Replying to the discussion on the Appropriation Bill 2026 in the Rajya Sabha, she said, “Concerns have also been raised about inflation and the cost of living… the government is closely monitoring price trends and has taken necessary steps to ensure that inflation remains within a manageable range.”

Inflation trend remains benign

India’s retail inflation trajectory has remained largely contained in recent months. Consumer Price Index (CPI)-based inflation stood at 3.2% in February 2026, up from 2.7% in January, but still comfortably within the Reserve Bank of India’s tolerance band of 2–6%.

This follows a sharp moderation in late 2025, when inflation dipped to near 1–2%, driven by easing food prices and favourable base effects. On a quarterly basis, inflation has gradually firmed up from sub-2% levels in the December quarter to around 3% in early FY26, signalling mild but manageable price pressures.

The current trend marks a significant shift from the post-pandemic phase, when supply disruptions and elevated global commodity prices had pushed inflation above the central bank’s comfort zone, prompting aggressive monetary tightening.

FY26 outlook faces external pressures

While projections for FY26 peg inflation in the 3–4% range, risks are beginning to emerge. Economists expect a modest uptick in inflation in the coming months, largely driven by global commodity trends.

A key concern is the escalation of tensions in West Asia, particularly the Iran-Israel conflict, which has pushed up crude oil and natural gas prices. Higher energy costs typically feed into transportation and manufacturing, eventually impacting retail inflation, as per industry analysts.

India had previously faced similar pressures during earlier oil shocks, where spikes in crude prices translated into higher fuel and input costs, underscoring the economy’s vulnerability to external energy dynamics.

Policy balancing act amid global volatility

For an import-dependent economy like India, sustained elevation in crude prices raises the risk of imported inflation and currency pressures. Analysts caution that a prolonged spike in oil prices could complicate the inflation trajectory and widen the current account deficit.

The government’s reassurance comes at a time when global uncertainty remains elevated, with geopolitical tensions disrupting supply chains and keeping commodity markets volatile. This adds complexity to inflation management, even as domestic price trends remain within the central bank’s comfort zone.

Sitharaman has earlier emphasised that maintaining a balance between growth and price stability remains central to policymaking, indicating that authorities are likely to remain vigilant as external risks evolve.