Is it possible to use an RFID tag inside a stainless steel enclosure? I am looking for a way to uniquely and easily identify a sensor. An alternative possibility is a laser engraved bar code.
The "perfect" Faraday cage requires the metal to be a perfect conductor. Copper is a great material for Faraday cages.
However, stainless steel isn't a great conductor. It's ok, but you will find that some RF, particularly low frequency high power RF, will penetrate the case, and the RFID tag will affect that field.
However, you're probably not going to be able to use an off-the shelf RFID unit for this if you depend on RF coupling.
Most inexpensive RFID tags operate on the magnetic field rather than the RF field, and fortunately for you many stainless steal alloys have very weak interaction with magnetic fields.
If you choose an RFID transponder with a large magnetic loop antenna, and you have the reader very near, you should be able to use RFID inside your stainless steel case with very few problems.
You'll want to experiment with different stainless steel alloys, and different transponders, but you should be able to find something off-the-shelf that works. I'd aim for lower frequency RFID - I would expect 125kHz RFID to work fine in this situation.
I agree with most of the previous answers that the environment is very challenging, and with all the theoretical arguments raised. My answer is: with a usual tag, probably not, but then you can take a look at iDTronic In-Metal Tags. (just search it like that in Google). Personally, I haven't tested these tags, so I cannot guarantee performance or readability in your environment, just wanted to point out that such a product exists and in UHF.
Not possible if the tag is completely enclosed by metal, the enclosure is an effective Faraday cage. The bar code might be the better choice unless you can somehow mount the RFID tag on the outside of the enclosure.
It might work to a certain extent at low RFID frequencies (like 125 kHz) and with a thin stainless steel enclosure but it will be impaired. If the RFID frequency is 13.56 MHz then it's not going to work at all.