India’s retail inflation rose to 3.21% year-on-year in February, according to government data released on Thursday. The figure marks an increase from 2.74% in January.

The latest reading came slightly above expectations. A Reuters poll of economists had projected inflation at about 3.1% for the month.

Despite the rise, inflation remained below the Reserve Bank of India’s target of 4% and within the central bank’s tolerance band of 2% to 6%.

Officials said higher prices for food, personal care products and precious metals contributed to the increase.

🍚 Food Prices Push Inflation Higher

Food inflation played a key role in February’s rise in prices. Data showed food inflation reached 3.47% year-on-year, compared with 2.13% in January.

Meanwhile, prices of personal care products rose 19.6%, slightly higher than the previous month’s 19% increase.

Precious metals also recorded sharp increases. Silver jewellery prices rose about 161% year-on-year, while gold prices climbed roughly 48.2% during the same period.

Economists said the surge in precious-metal prices added to inflation pressures during the month.

📉 Core Inflation Remains Stable

Core inflation, which excludes volatile food and energy prices, remained relatively stable. Economists estimated core inflation at about 3.4% in February, suggesting that underlying demand conditions in the economy remain moderate.

Analysts said the latest inflation reading largely matched expectations. However, they noted that risks to inflation could increase in the coming months.

🛢️ Oil Prices Pose Future Risks

Rising global energy prices could create additional inflation pressures for India. Crude oil prices recently climbed to four-year highs, partly due to geopolitical tensions in the Middle East.

India is the world’s third-largest oil importer, so higher global prices could affect domestic fuel costs and broader inflation trends.

Meanwhile, the government has already taken steps to address potential shortages of cooking gas by ordering refiners to increase domestic supply. Economists said a prolonged rise in energy prices could influence inflation and the country’s current account balance.

🏦 RBI Expected to Remain Cautious

The latest inflation data comes as the Reserve Bank of India (RBI) evaluates its monetary policy stance.

Earlier rate cuts were supported by strong economic growth and relatively low inflation. However, the central bank kept interest rates unchanged in February.

Analysts expect the RBI to monitor inflation risks closely at its next policy meeting scheduled for April 6-8.

For now, economists say policymakers will watch global energy markets and domestic price trends before making further decisions.