The Pass-through of Global Crude Oil Prices to Inflation in India: Institutional Filters, Transmission Channels and Evidence from Published Research

Aakash

The Pass-through of Global Crude Oil Prices to Inflation in India: Institutional Filters, Transmission Channels and Evidence from Published Research

Author(s)	Aakash
Country	India
Abstract	India’s structural dependence on imported petroleum at an all-time high of 88.2% of domestic consumption in FY 2024-25, makes the country’s domestic pricing level currently vulnerable to shifts in the international energy markets. However, the magnitude, speed and mechanisms of oil-price pass-through are still a matter of empirical debate and are also institutionally dependent. In this article, we synthesize the existing empirical evidence under a cohesive conceptual framework combining direct, indirect, exchange-rate, fiscal and expectations channels to investigate the relationship between international crude oil prices and inflation in India. We particularly focus on the interrelation of both indicators. Secondary data from the Reserve Bank of India (RBI), Ministry of Statistics and Program Implementation (MoSPI), Petroleum Planning and Analysis Cell (PPAC) and World Bank has been used to trace the changes in pass-through elasticity over time. These changes are due to reforms in the price of petroleum, changes in tax policy and currency fluctuations. Previous studies have shown the absence of transmission under pricing schemes. A recent study estimates a 10% increase in the price of international crude oil would push headline consumer inflation up by about 20 basis points, depending on the degree of government intervention and exchange rate movements. The analysis reveals that the pass-through is neither immediate nor total. Instead, it is channeled through excise charges, which made up $3.08 trillion of central income in the 2025-26 period. The pass-through also contains subsidy allocations and the changing stance of monetary policy under flexible inflation targeting. The results suggest that crude oil remains an important external factor contributing to inflationary pressures even when the effects of crude oil abroad are dampened by policy buffers in the United States. The final section of the article deals with the implications for energy diversification, management of strategic reserves, and calibration of macroeconomic stabilization measures. India’s installed renewable energy capacity reached 274.68 GW.
Keywords	Crude Oil Prices, Inflation Pass-Through, Consumer Price Index, Wholesale Price Index, Energy Policy, Monetary Policy, Exchange Rate, Fiscal Buffer
Field	Sociology > Economics
Published In	Volume 8, Issue 5, September-October 2026
Published On	2026-09-06

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The Pass-through of Global Crude Oil Prices to Inflation in India: Institutional Filters, Transmission Channels and Evidence from Published Research

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