Retail Inflation Drops To 3.34% In March, Lowest Since August 2019
The WPI measures price changes at the wholesale level, offering insight into supply and demand dynamics in sectors such as manufacturing and construction
India's retail inflation eased further to 3.34 per cent in March, down from 3.61 per cent in February, as per government data released on Tuesday. The Consumer Price Index (CPI)-based inflation remains well within the Reserve Bank of India’s (RBI) medium-term target of 4 per cent, and comfortably within the 2-6 per cent tolerance band.
This marks the lowest year-on-year inflation rate since August 2019, according to the Ministry of Statistics and Programme Implementation.
Wholesale inflation also showed a decline, with the Wholesale Price Index (WPI)-based inflation dropping to 2.05 per cent in March from 2.38 per cent in February. The decrease was primarily driven by lower prices in food, fuel, and power sectors, even though the cost of manufactured goods continued to rise.
The WPI measures price changes at the wholesale level, offering insight into supply and demand dynamics in sectors such as manufacturing and construction, while the CPI reflects the inflation experienced by consumers.
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RBI's CPI-Based Inflation Projections
For the current fiscal year (FY26), the RBI projects CPI-based inflation to average 4.0 per cent, assuming a normal monsoon. Inflation is expected to ease in the first half of the year, with projections of 3.6 per cent in Q1, 3.9 per cent in Q2, and 3.8 per cent in Q3. However, inflation is likely to edge up in the latter half, reaching 4.4 per cent in Q4.
RBI Monetary Policy Committee
Earlier this month, the RBI’s Monetary Policy Committee (MPC) voted unanimously to reduce the repo rate by 25 basis points to 6.0 per cent, marking the second consecutive rate cut. The RBI's change in policy stance to 'accommodative' suggests further rate cuts may follow to support economic growth while keeping inflation within the target range.
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