According to a Crisil Intelligence analysis, the ongoing conflict in West Asia has caused a substantial increase in global energy costs, although the effect on India's retail inflation has been little thus far.
"Despite a full month since the onset of the conflict, retail inflation showed a relatively low impact of the energy shock." stated the report.
According to the research, the pass-through to domestic retail inflation has been modest even though Brent crude prices increased by over 45% in March and international natural gas prices increased by nearly 69% when compared to February.

Due mostly to an increase in the cost of food and gasoline, India's Consumer Price Index (CPI)-based inflation increased slightly from 3.2% in February to 3.4% in March. The global energy shock's wider effects, however, were kept under control.
The research emphasised how government actions protected consumers from rising fuel prices around the world. Petrol and diesel retail prices remained mostly stable, and households were further protected from price pressure by excise tax reductions announced in late March.
The fact that core inflation stayed steady at 3.7% suggests that the second-round consequences of rising energy costs have not yet materialised. Due to a correction in world prices and a large base, lower inflation in gold and silver also contributed to the containment of total inflation.

In the future, Crisil projects that inflation will average 4.5% in fiscal 2027, with a possible increase to 4.7% if the conflict in West Asia continues and energy costs stay high. In addition to wider second-round effects through trade and logistics expenses, sustained increases in global fuel prices may eventually result in increased retail pricing for transportation and cooking fuels.
Weather-related dangers were also noted in the report. According to the India Meteorological Department, El Nino conditions are predicted in 2026, and the southwest monsoon will be below average at 92% of the long-period average. This raises questions about food inflation, particularly if agricultural productivity is impacted by heatwaves and insufficient rainfall.Inflation trends were uneven when it came to food. While vegetables, meat, fish, and edible oils saw an increase in inflation, cereals and pulses continued to experience deflation, albeit at a slower rate. Because spices and associated goods are becoming more expensive, ready-made food products also saw increasing inflation.
Higher LPG and piped natural gas prices contributed to fuel inflation, while electricity remained deflationary.
Categories including housing, clothing, and education stayed relatively steady in the core segment. Although airfares increased significantly during the month, transportation inflation has not yet been significantly impacted by shocks to the world's gasoline prices.
According to Crisil, the two primary future upside risks to inflation are a protracted geopolitical conflict and weather-related disruptions.