The government has retained for five years its retail inflation target at 4%, with a margin of 2% on either side.

The target will remain in place till 31 March 2031.

India adopted its ‌inflation-targeting framework in 2016. The government tasked the Reserve Bank of India (RBI) with keeping headline consumer price inflation within the targeted band. 

The framework was last reviewed in March 2021 and the same target was maintained. This is the second time the government has retained the inflation target.

A gazette notification issued by the Department of Economic Affairs dated 25 March said the central government, in consultation with the RBI, hereby notifies the inflation target for the period beginning April 1, 2026, and ending on March 31, 2031.

According to the notification, the inflation target is 4% with an upper tolerance level of 6% and a lower tolerance level of 2%.

Over the past decade, India’s inflation has stayed within the mandated band for roughly three-quarters of the time, with volatility peaking during the pandemic years.

India’s retail inflation rose to 3.21% in February from 2.74% a month ago.