New Delhi, April 15 – India’s annual retail inflation slowed to a five-and-a-half-year low of 3.34% in March, down from 3.61% in February, driven by easing food prices, government data showed on Monday, reinforcing expectations of further interest rate cuts by the central bank.
Consumer food price inflation (CFPI) fell sharply to 2.7%, its lowest level in three years, from 3.75% in February, data from the Ministry of Statistics and Programme Implementation showed. Prices of vegetables, eggs, and pulses declined, with tomato prices dropping nearly 35% in March. Potato and onion inflation also eased, while rice and wheat prices remained elevated but moderated slightly.
Vegetable prices declined by 7% for a second consecutive month, while pulses saw a 2.7% deflation. Egg prices fell by over 3%. However, edible oils and fruits continued to witness high inflation. Fuel and light inflation rose modestly to 1.48%, marking the first increase since September 2023.
Rural inflation eased to 3.25% from 3.79% a month earlier, while urban inflation inched up to 3.43% from 3.32%. Among states, Kerala recorded the highest inflation at 6.6%, followed by Chhattisgarh, Maharashtra, Tamil Nadu, Karnataka, Assam, and Haryana, each above 3.3%. Delhi and Telangana posted the lowest rates at 1.5% and 1.1%, respectively.
The wholesale price index (WPI) also showed a cooling trend, easing to 2.05% in March from 2.38% in February. Food prices under the WPI rose at a slower 4.66%, compared to 5.9% in the previous month, while manufactured goods inflation accelerated slightly. The easing inflation follows two consecutive 25 basis point repo rate cuts by the Reserve Bank of India (RBI), signaling a shift in focus toward supporting economic growth.
“The softer-than-expected CPI will provide further comfort to the RBI to continue to prioritise growth,” said Upasna Bharadwaj, chief economist at Kotak Mahindra Bank. “We retain our view that the RBI will continue on its accommodative stance with the terminal repo rate likely around 5% to 5.25%.” Economists expect inflation to remain below the RBI’s 4% target in the near term, with a 50 basis point rate cut seen likely.
“Excluding food and fuel, inflationary pressures remain elevated for households, particularly those in lower income brackets,” said Vivek Rathi, national director of research at Knight Frank India. “It is crucial for commercial banks to pass on the benefits of rate cuts to support consumption and housing demand, especially in the affordable segment.”
