India's Retail Inflation Rises to 3.21% in February 2026 as Food Prices Climb; Within RBI's Target Band
India's retail inflation edged higher in February 2026, driven primarily by rising food prices, according to data released by the National Statistics Office (NSO). The Consumer Price Index (CPI)-based inflation rose to 3.21% in February, up from 2.74% in January. Despite the uptick, the headline figure remained comfortably within the Reserve Bank of India's (RBI) target band of 2% to 6%, centred around a 4% mandate.
First Data Under New CPI Base Year
The February figures are also notable as the first inflation reading calculated using the revised CPI series with 2024 as the base year, which was introduced last month. The methodological update brings the inflation measurement framework in line with current consumption patterns across India.
Food Inflation Drives the Uptick
Food inflation rose sharply to 3.47% in February, up from 2.13% in January — and accounted for the bulk of the overall CPI increase. According to ICRA Chief Economist Aditi Nayar, the food and beverages segment contributed as much as 44 basis points of the total 47 basis point rise in headline inflation between the two months, making it almost entirely a food-driven phenomenon.
Commodities that saw notable price acceleration during February include:
- Precious items: Silver, gold, diamond, and platinum jewellery.
- Vegetables: Tomato and cauliflower.
- Other food items: Coconut-copra.
On the other hand, some food categories provided relief through disinflation, including garlic, onion, potato, arhar (pigeon pea), and litchi.
Core Inflation Remains Stable
Core inflation — which excludes food and beverages, electricity, gas, and other fuels — held steady at 3.4% in February, unchanged from January. This stability in core prices suggests that underlying demand-side price pressures remain moderate, even as food and energy costs fluctuate.
Rural vs Urban Inflation
Regional data showed a slight divergence between rural and urban price pressures. Rural inflation stood at 3.37%, marginally higher than urban inflation at 3.02%, reflecting the greater weight of food in rural consumption baskets.
Among states, Telangana recorded the highest inflation at 5.02%, while Mizoram reported the lowest at just 0.1%, highlighting significant regional variation in price dynamics across the country.
Oil Price Risk Looms Over Coming Months
While February's inflation print remains manageable, economists are flagging upside risks in the months ahead, particularly from the recent surge in global crude oil prices triggered by the Iran war. Sujan Hajra, Chief Economist at Anand Rathi Group, noted that while core inflation remains broadly stable, the spike in oil and gas prices introduces meaningful upside risks to the inflation outlook going forward.
However, Hajra added that these pressures are likely to be transitory in nature. He suggested the RBI may respond with a more accommodative liquidity stance to cushion financial markets from geopolitical volatility, rather than tightening policy. He also cautioned that the February inflation print may have mildly negative near-term implications for debt, equity, and foreign exchange markets.
RBI MPC Meeting: April 6–8
The next meeting of the Monetary Policy Committee (MPC) of the RBI is scheduled for April 6–8, 2026. With inflation still within the target band but trending upward, and crude oil prices posing a fresh risk, the MPC's tone and any forward guidance will be closely watched by markets. The interplay between global energy prices, domestic food inflation, and the RBI's monetary stance will be a key macro theme for investors to monitor in the weeks ahead.
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