India’s retail inflation drops down to 10-month low at 4.85 percent in March

Hitting a 10-month low this month, India’s retail inflation slipped down to 4.85 percent in March 2024, as opposed to 5.09 percent in the previous month. An earlier Reuters poll estimated the retail inflation to come down to 4.91 percent, but the rates dropped below the prediction.

The number has remained within the Reserve Bank of India’s (RBI) tolerance band of 2-6 per cent. Food inflation, which accounts for nearly half of the overall consumer price basket, rose 8.52% in March, compared with a 8.66% rise in February. Fuel prices fell 3.2% year-on-year, compared with a 0.77% fall in February.

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The official data regarding the inflation rates is yet to be released by the government, as the details are awaiting approval from the Election Commission of India (ECI), reported Reuters citing local news reports.

Core inflation, which strips out volatile food and energy prices, was estimated at 3.3%-3.4% in March, compared with 3.3%-3.37% in February, according to two economists.

The lower retail inflation could help Prime Minister Narendra Modi during two-month long national polls starting from April 19, where he is seeking a third consecutive term. To contain food prices Modi’s government has kept a ban on exports of wheat, rice and onions.

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While speaking to Reuters, economist Garima Kapoor said, “March CPI (consumer price index) inflation came in line with expectations amid continued softness in core inflation and impact of a cut in LPG cylinder prices. In the near term, likely higher food prices amid rising mercury level would be a key risk to watch out for. We maintain our call of the first rate cut by the Monetary Policy Committee (MPC) in Q3FY25 (third quarter of financial year 2025).”

RBI governor Shaktikanta Das, while addressing the press on the outcomes of the Monetary Policy Committee (MPC) of FY2025, said that inflation was a challenge for the country, refering to it as the “elephant in the room”.

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Das said during the press briefing, “The elephant in the room was CPI inflation. The elephant has now gone out for a walk and appears to be returning to the forest.”

(With inputs from agencies)

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