Prolonged LPG disruption could push prices higher in some states: SBI report

A prolonged supply disruption in liquefied petroleum gas (LPG) could push inflation higher in several states even though India’s overall retail inflation remains moderate, according to an SBI research report.

India’s Consumer Price Index (CPI) inflation rose to 3.21% in February 2026, up from 2.75% in January, mainly due to higher food prices.

However, the report warned that an ongoing LPG crisis could pose additional inflation risks, particularly in states where cooking gas carries a higher weight in the consumer price basket.

“Although, we believe that the current LPG crisis may be resolved going forward,” the report said. “If it prolonged it will impact the states where weight of LPG/piped gas is more as compared to national weight (if prices of LPG are further increased from here!).

States such as Mizoram, Manipur and Punjab have LPG weights exceeding 2.5% in the CPI basket, making them more vulnerable to price shocks, it added.

Petroleum Minister Hardeep Singh Puri on Thursday asserted that India’s crude oil and domestic LPG supplies are “fully protected” despite the disruption in global energy markets.

Addressing concerns raised in Lok Sabha, Puri said the government had taken steps to cushion the impact of the conflict on India’s fuel supplies.

“The steps taken are in response to the disruption of the global energy supply arising from the ongoing conflict in West Asia. The world has not faced a moment of this kind in history,” he told the Parliament.

Puri said India has significantly increased sourcing of crude oil from outside the Strait of Hormuz.

“Non-Hormuz sourcing has risen to approximately 70% of crude imports, up from 55% before the conflict began,” he said.

The SBI report also highlighted growing risks from imported inflation, which stood at 5.7% in February.

Exchange rate pressures, with the rupee trading in the ₹91–93 per dollar range, along with volatile global energy prices could further push inflation higher, it said.

The report flagged global risks including geopolitical tensions affecting energy supplies and a possible El Niño weather pattern in 2026, which could impact the monsoon and food prices.

“Weather patterns along with ongoing geopolitical risks affecting energy prices can adversely impact inflation in 2026,” the report said.