Recent increases in petrol and diesel prices could directly add about 36 basis points to India's headline inflation in the coming months, the Reserve Bank of India said on Friday, warning that elevated energy prices and supply disruptions are likely to weigh on economic activity."The increase implies a direct impact of about 36 basis points on headline inflation, which, along with second order effects, would get reflected in CPI inflation in the coming months," RBI Governor Sanjay Malhotra said.Also Read: RBI GDP Forecast cut to 6.6% for FY27 as oil, war and subpar monsoon risks mountPetrol and diesel prices have risen cumulatively by 7.4% and 8.4%, respectively, since May, the central bank said in its monetary policy statement. The increase, along with second-round effects, is expected to be reflected in consumer price inflation going forward.Higher global energy prices are also feeding into the costs of commercial LPG, industrial raw materials, chemicals, rubber and plastic products, raising the risk of broader inflationary pressures, the RBI said."Looking ahead, elevated energy and other commodity prices coupled with continued supply disruptions are likely to affect economic activity," the central bank said.The RBI said the global environment had deteriorated since its last policy meeting, with the prolonged conflict in West Asia disrupting supply chains and keeping energy prices elevated.It kept its key repo rate unchanged at 5.25% on Friday and retained neutral policy stance, while projecting economic growth of 6.6%, a reduction from 6.9% expected earlier. Inflation outlook stood at 5.1%, higher than 4.6% from the last review.The adverse effects of extended supply disruptions and higher energy costs were reflected in the central bank's lower growth projections and higher inflation forecasts compared with its April policy review.Also Read: Why the RBI kept rates unchanged amid oil, rupee and geopolitical pressuresElevated energy prices and global supply constraints are already having spillover effects on economic activity, the RBI said, although domestic demand remains resilient and manufacturing and services activity continue to expand.
RBI's inflation problem is no longer restricted to your kitchen
RBI MPC Meeting 2026 Crude Oil Price Impact on Inflation: India's headline inflation may rise by 36 basis points due to higher petrol and diesel prices. The Reserve Bank of India warns that elevated energy costs and supply disruptions will impact economic activity. Global factors are also contributing to broader inflationary pressures. The central bank has maintained its key repo rate and policy stance.
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