India’s Retail Inflation Hits Six-Year Low
India’s retail inflation has dipped to 3.34% in March 2025, marking its lowest level since August 2019. This decline is primarily attributed to falling prices of vegetables and protein-rich food items. In comparison, inflation was recorded at 3.61% in February and significantly higher at 4.85% in March of the previous year.
Key Drivers Behind the Decline
The latest Consumer Price Index (CPI) data reveals a notable easing in food inflation, which dropped to 2.69% in March from 3.75% in February. This is a significant decrease compared to the 8.52% food inflation rate recorded in March 2024. The Ministry of Statistics and Programme Implementation (MOSPI) highlighted that the top contributors to inflation included coconut oil (56.81%), coconut (42.05%), gold (34.09%), silver (31.57%), and grapes (25.55%). Conversely, certain items experienced deflation, with ginger (-38.11%), tomato (-34.96%), and cauliflower (-25.99%) showing the largest decreases.
The rural sector saw a substantial decline in both headline and food inflation. Rural headline inflation fell to 3.25% in March, down from 3.79% in February. Food inflation in rural areas also decreased sharply to 2.82% from 4.06% in the previous month. This trend reflects the impact of lower prices for essential commodities in rural markets.
Urban Areas Experience Mixed Trends
In contrast to rural areas, urban regions experienced a slight increase in headline inflation, which rose to 3.43% in March from 3.32% in February. However, food inflation in urban areas saw a significant decline, dropping to 2.48% from 3.15% in February. This mixed trend indicates varying inflationary pressures across different sectors of the economy.
The Reserve Bank of India (RBI) recently cut the repo rate by 25 basis points, citing easing price pressures as a key factor in their decision. For the fiscal year 2025-26, the RBI has projected an average CPI inflation rate of 4%, with quarterly estimates of 3.6% for Q1, 3.9% for Q2, 3.8% for Q3, and 4.4% for Q4.
Wholesale Price Inflation Declines
Alongside retail inflation, wholesale price inflation also saw a decline, falling to a six-month low of 2.05% in March. This decrease is attributed to reduced prices of vegetables, potatoes, and other essential food items. In comparison, wholesale price inflation was recorded at 2.38% in February and just 0.26% in March 2024. The overall moderation in inflation rates reflects a broader trend of easing price pressures in the Indian economy, providing a more favorable environment for consumers and businesses alike.
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