India’s consumer price inflation increased for the sixth consecutive month in April, rising marginally to 3.48% from 3.40% in March, despite government efforts to keep fuel prices steady to soften the impact of volatile global oil markets.
The latest reading came in below market expectations of 3.80%, according to a poll of economists conducted by Reuters, indicating that price pressures remain relatively contained even as a gradual upward trend persists.
Food inflation, a key component of the index in India, rose to 4.2% in April from 3.87% in March, according to data from the Ministry of Statistics and Programme Implementation, reflecting continued pressure on household budgets.
Former Reserve Bank of India Governor Duvvuri Subbarao cautioned that the trajectory of inflation is more concerning than its current level, warning that prolonged price increases could reshape expectations in the economy.
“If inflation persists long enough, inflation expectations harden, and it can morph what is today a supply shock into a demand shock,” Subbarao said during an interview on CNBC’s Inside India, adding that such a shift would pose a challenge for monetary authorities.
India remains vulnerable to global energy market disruptions, particularly tensions in the Middle East, given that it imports about 85% of its crude oil needs. Critical supply routes such as the Strait of Hormuz are central to its energy security, handling large volumes of crude, liquefied natural gas, and liquefied petroleum gas shipments.
In its latest monetary policy update, the Reserve Bank of India warned that geopolitical instability in the Middle East could disrupt energy supply chains and weigh on both inflation and growth prospects. The central bank has since revised its growth outlook slightly downward, trimming projections for the April–June quarter to 6.8% from 6.9%, and for July–September to 6.7% from 7.0%.
The bank also projects headline inflation at around 4.6% for the financial year ending March 2027.
While the government has largely kept retail fuel prices unchanged and made only modest adjustments to cooking gas rates, analysts warn that sustained increases in global oil prices could eventually force pass-through effects on consumers.
Credit rating agency CRISIL noted that rising energy costs may increase core inflation pressures over time and flagged early signs of economic strain, including currency weakness and pressure on foreign exchange reserves.
Prime Minister Narendra Modi has urged citizens to conserve fuel, limit non-essential foreign travel, and postpone discretionary spending such as gold purchases amid ongoing global price volatility.
Meanwhile, the Indian rupee continues to trade near historic lows against the US dollar, with economists warning that higher energy import costs could widen both the trade and current account deficits in the months ahead.