A customer hands over a pineapple to a vendor at a roadside shop decorated with plastic Vishu Konna flowers (scientific name: Cassia fistula) ahead of the Vishu festival in Kochi, India, on April 14, 2026.
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India’s consumer price inflation in April rose for the sixth straight month to 3.48% from 3.40% in March, even as the government kept prices at the pump steady to shield consumers from rising global oil prices.
The headline inflation number was below economists’ expectations for a 3.80% rise in the consumer price index, as per a Reuters poll.
The latest inflation reading may matter less than its trajectory, Duvvuri Subbarao, former governor of the Reserve Bank of India, told CNBC’s Inside India on Tuesday.
“If inflation persists long enough, inflation expectations harden, and it can morph what is today a supply shock into a demand shock,” he said. That would be of “particular concern to the RBI,” Subbarao added.
India, the world’s fastest-growing major economy, is among the countries most vulnerable to the supply disruptions caused by the Iran war. The South Asian country imports nearly 85% of its fuel needs and relies on the Strait of Hormuz for about 50% of its crude imports, 60% of its liquefied natural gas, and almost all of its liquefied petroleum gas supplies.
Last month, in its monetary policy statement, India’s central bank governor Sanjay Malhotra warned that the intensity and duration of the conflict in the Middle East, and the damage it has caused to energy and other infrastructure, pose a “risk to the inflation and growth outlooks.”
The Reserve Bank of India also lowered India’s real gross domestic product growth forecast for the April-June quarter to 6.8% from 6.9% and for the July-September quarter to 6.7% from 7.0%, citing the impact of the Iran war on the economy.
It estimates headline inflation for the financial year ending in March 2027 to be around 4.6%.
Pressure to raise prices
While the government has refrained from raising fuel prices so far and only marginally hiked cooking gas prices, a persistent rise in global fuel prices could raise the risk of price hikes, according to S&P Global-owned Indian research and credit rating firm Crisil.
Signs of growing strain on the economy are already emerging. In a bid to conserve foreign exchange reserves, Indian Prime Minister Narendra Modi on Sunday urged citizens to curb fuel use amid rising global prices, reduce overseas travel, and pause gold purchases.
The Indian rupee remained under pressure, trading near an all-time low against the dollar, as higher energy costs are expected to significantly widen the country’s trade and current account deficits.
“A sharp rise in the cost of energy and other inputs, as well as trade and transportation, is expected to be passed by producers to consumers, raising core inflation,” it said in a note on Monday.
Crisil expects India’s inflation to average around 5.1% in the financial year ending March 2027.