India’s Retail Inflation Ascends to 3.21% in February; Aligns with RBI’s Quarterly Projections

Market snapshot: India's Consumer Price Index (CPI) for February 2026 has clocked in at 3.21% year-on-year, surpassing market estimates of 3.14%. This mark represents a sharp climb from January’s 2.75%, continuing the normalization trend under India's new CPI 2024 base series. Despite the jump, the figure remains within the Reserve Bank of India’s (RBI) 2%–6% tolerance band.

Summary: Retail inflation hit 3.21% in Feb, exceeding the 3.14% forecast but remaining perfectly aligned with the RBI’s anticipated technical firming for Q4 FY26.

Key Takeaways

• Actual inflation of 3.21% exceeded consensus estimates by 7 basis points.
• The rise from January's 2.75% is attributed primarily to unfavorable base effects and a technical firming in food prices.
• Core inflation remains stable at approximately 2.6%, suggesting underlying price pressures are contained.

SAHI Perspective

The 3.21% print is no cause for immediate alarm as it sits precisely at the RBI's quarterly projection of 3.2%. Governor Sanjay Malhotra had previously flagged this 'technical' rise in the February policy review. With the repo rate held at 5.25% and a neutral stance, the central bank is unlikely to pivot until inflation consistently aligns with the 4% median target later in FY27.

Closing Insight

As inflation navigates a technical peak, the focus shifts to the upcoming April policy review where the RBI will likely maintain its wait-and-watch approach.

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