India's inflation rate rose to 3.21% in February, before the full impact of the Iran war is felt on the world's fourth largest economy. The Consumer Price Index (CPI) rose from 2.74% in January, according to government data.
Although below the RBI's inflation target, food inflation was at 3.47% in February, compared to 2.13% a month ago.
The ongoing Iran war is expected to weigh on India's inflation math, as the country is the world's third-largest oil importer.
Finance Minister Nirmala Sitharaman said the government does not expect a sharp rise in inflation, but a government report warned of a prolonged Iran war weakening the rupee and widening India's current account deficit.
CLSA estimates every 10% increase in crude oil prices raises retail inflation by 40 to 60 basis points.
