India's Retail Inflation Moderates To 5.66 Per Cent In March From 6.44 Per Cent In February

In an attempt to rein in the prices, the RBI has so far hiked the benchmark repurchase rate by 250 basis points cumulatively since May 2022

Retail inflation in India fell to 5.66 per cent in March, according to the data from the Ministry of Statistics and Programme Implementation on Wednesday. The country’s rural inflation in March stood at 5.51 per cent, while urban inflation was at 5.89 per cent. At 5.66 per cent, the latest CPI inflation print is the lowest in 15 months, having come in at 5.66 per cent in December 2021. The figure is also broadly in line with consensus estimates.

In February, India’s headline inflation based on consumer price index (CPI) had dropped to 6.44 per cent from 6.52 per cent in January. The rate of inflation was still above the tolerance band of the Reserve Bank of India (RBI). In January 2023, India’s inflation had jumped to a three-month-high of 6.52 per cent from 5.7 per cent in December 2022.

According to the National Statistical Office (NSO), the inflation in the food basket was 4.79 per cent in March, as against 5.95 per cent in February and 7.68 per cent in the year-ago period. The price data are collected from selected 1,114 urban markets and 1,181 villages covering all states/UTs by the NSO.

A poll by Reuters had earlier said that India's retail inflation eased in March to 5.8 per cent owing to softer food price rises, dipping below the Reserve Bank of India's upper tolerance limit for the first time this year. It said that food inflation, which accounts for nearly half of the overall consumer price basket, was expected to have moderated due to falling vegetable prices, offset in part by surging cereal prices. 

In an attempt to rein in the prices, the central bank has so far hiked the benchmark repurchase rate by 250 basis points cumulatively since May 2022. In the last fiscal, which ended March 31, RBI projected average annual retail inflation at 6.5 per cent. In a surprise move, the RBI's Monetary Policy Committee (MPC), headed by Governor Shaktikanta Das, last week announced to keep policy rate unchanged at 6.5 per cent.

Core inflation, which excluded volatile food and fuel inflation and a key concern for the RBI, has remained sticky above 6 per cent in recent months. The MPC lowered forecast of CPI inflation to 5.2 per cent from 5.3 per cent previously.