​Price pressures, Pg6

Key Highlights:

• Retail inflation in India rose to a 10-month high of 3.2% in February 2026, driven by food inflation and precious metal prices.
• Food and beverage inflation increased to 3.35% in February, with tomato prices rising over 45%.
• Gold jewellery inflation reached 48.2% in February, while silver jewellery inflation exceeded 160%.
• The El Niño effect is predicted to return, potentially weakening the monsoon and raising food prices.

Detailed Insights:

• The new Consumer Price Index (CPI) series lacks sufficient historical data for robust comparisons but offers insights into future trends.
• Last year's low inflation was partly due to a statistical base effect, which is no longer present.
• Continued conflict in West Asia could constrain natural gas supplies, impacting fertilizer production and subsequently food prices.
• Rising oil prices and LPG/LNG shortages are increasing input costs for industries, which will eventually be passed on to consumers.
• The Reserve Bank of India’s (RBI) Monetary Policy Committee faces the challenge of addressing supply-driven inflation, where raising interest rates may have limited impact and could hurt growth.
• Government efforts to expedite alternative fuel sources are crucial to mitigate the impact of rising fuel costs on inflation.

Key Concepts Involved:

• Consumer Price Index (CPI): A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.
• Inflation: The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.
• Monetary Policy Committee (MPC): A committee of the Reserve Bank of India (RBI) that is responsible for setting the policy interest rates to control inflation and achieve economic growth.

Components of CPI Basket