Sharp spike in international energy prices has had limited pass-through to domestic retail prices, says RBI minutes

RBI noted in its monetary policy minutes that as of June 2026, fuel inflation has remained modest because the sharp spike in international energy prices has had limited pass-through to domestic retail prices. CPI inflation has crossed the 4% target by small margin. However, core inflation was still below 4%. Core inflation excluding precious metals remained much lower at 2.5 per cent. These numbers suggest limited pass-through so far of the terms-of-trade shocks (due to a sharp escalation in crude prices and a weakened INR) the economy experienced over the last two quarters.

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