India's retail inflation in March hits 5-year low of 3.3%
What's the story
India's retail inflation rate plunged to 3.34% in March, its lowest since September 2019. The government released the data on Tuesday, noting a decline from February's 3.61%. The decline is primarily due to a consistent drop in food prices, which also played a role in February's inflation rate. The headline inflation remains comfortably within the RBI's tolerance band of 2-6% and below the ideal target of 4%.
Food prices
Food inflation slows down significantly
Food inflation, which makes up nearly half of the Consumer Price Index (CPI), eased to 2.69% in March, down from 3.75% in February. Among kitchen essentials, vegetable prices saw a sharper decline, with inflation falling 7.04% in March, compared to a 1.07% drop in February. Cereals continued to see price pressure with inflation at 5.93%, while pulse prices dropped by 2.73%, offering some relief to household budgets.
Energy costs
Fuel and light inflation rates stood below 2%
The inflation rate for fuel and light stood at 1.48% in March. Rural inflation fell to 3.25% from February's 3.79%, while urban inflation fell to 2.48% from February's 3.32%. RBI Governor Sanjay Malhotra noted the downward trend in inflation, crediting a favorable outlook on food prices. Despite global uncertainties, including US tariff hikes, the MPC has kept its inflation forecast for FY25-26 unchanged at 4%.