India's inflation rate, which policymakers aim to keep at 4%, has faced significant challenges due to a series of supply shocks since late 2019, including the COVID-19 pandemic and geopolitical tensions stemming from the US-Iran conflict. As of the last financial year ending March 2026, inflation was closer to 2%, providing room for lower interest rates. However, the recent escalation in crude oil prices, reaching nearly $110 per barrel following US President Donald Trump's statements, raises concerns about future inflation spikes. Additionally, the potential impact of El Niño, which can lead to reduced rainfall and agricultural distress, complicates the inflation outlook. HSBC's forecasts indicate that with a moderate El Niño, inflation may remain within the RBI's comfort zone, but severe conditions could push it beyond, prompting the RBI to consider interest rate hikes. The interplay between crude oil prices and climatic conditions will be critical in determining India's inflation trajectory in the coming months.