Retail Inflation Drops to a Five-Year Low

NEW DELHI: In a significant economic development, India's retail inflation has slowed to a more than five-year low in March, primarily due to sharply moderating food prices. This downturn paves the way for the Reserve Bank of India (RBI) to consider cutting interest rates in the coming months to bolster growth amidst global uncertainties.

Detailed Inflation Data

According to data released by the National Statistical Office (NSO), the consumer price index (CPI) rose an annual 3.3% in March, marking a decrease from February's 3.6% and significantly below the 4.9% recorded in March last year. The food price index also saw a notable slowdown to 2.7% in March, down from 3.8% in February and a stark contrast to the 8.5% in March last year.

Expert Predictions and Analysis

"With multi-year low inflation this month and benign inflation expectations going forward, we expect rate cuts of 50 basis points in June and August," stated Soumya Kanti Ghosh, group chief economic adviser at SBI. Experts anticipate retail inflation to remain at comfortable levels, thanks to easing food inflation, though they caution against potential impacts from geopolitical tensions and weather-related events.

Looking Ahead

Rajani Sinha, chief economist at CareEdge, projects CPI inflation to average 4.2% for FY26, supported by moderating food inflation. Meanwhile, wholesale price inflation moderated to a six-month low of 2.1% in March, offering further relief from persistent price pressures.