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Among the food items, vegetables saw a deflation of over 7 per cent while pulses were over 2.7 per cent.
Sharp correction in food prices brought retail inflation based on Consumer Price Index (CPI) down to 3.34 per cent in March as against 3.6 per cent of February, the government reported on Tuesday. It is the lowest year-on-year inflation after August 2019.
“The significant decline in headline inflation and food inflation during March is mainly attributed to decline in inflation of vegetables, eggs, pulses & products, meat & fish, cereals & products and milk & products,” a statement by the Statistic Ministry said. There is a decline of 27 basis points in headline inflation of March in comparison to February. Food inflation saw a decline of 106 basis points, slipping to 2.69 per cent in March from 3.75 per cent in February.
“The food inflation in March 2025 is the lowest after November 2021,” the Ministry said. Among the food items, vegetables saw a deflation of over 7 per cent while pulses were over 2.7 per cent. Meanwhile, edible oils and fruits saw a rise in prices as inflation for both items rose to over 17 per cent and 16 per cent, respectively.
Core inflation (headline inflation minus food and fuel inflation) was over 4 per cent.
Rajani Sinha, Chief Economist with CareEdge, said: “Core inflation also remained benign at 4.1 per cent despite a marginal uptick. Interestingly, the fuel and light category exited deflation after staying in the deflationary zone for 18 consecutive months. However, this trend in fuel and light is unlikely to be sustained as Discoms of some major States have slashed electricity prices,” she said.
LPG price hike
There were concerns about whether and expected heatwaves. A note by HDFC Bank said that some uptick in food price is expected in the coming summer season. “The increase in LPG price by ₹50 per cylinder is likely to have an impact of 8 basis points on headline CPI,” it said.
With a deeper reduction in headline inflation, there is expectation that Monetary Policy Committee might go for another cut in June meeting. “The softer than expected CPI inflation will provide further comfort to RBI to continue to prioritise growth. We retain our view that RBI will continue on its accommodative stance with the terminal repo rate likely around 5-5.25 per cent,” said Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank
Echoing the sentiment, Radhika Rao, Senior Economist at DBS Bank, said that despite a firmer core, January–March headline inflation not only undershot the RBI’s quarterly projection by a wide margin but also fell below the RBI’s target range. “This validates the central bank’s decision to shift to an accommodative stance, along with a rate cut at the April meeting. We maintain our call for further easing in June,” she said.
WPI inflation
Producers’ inflation based on Wholesale Price Index (WPI) dropped to around 2 per cent in March as against 2.38 per cent of February. However, it is much higher than 0.26 per cent of March 2024.
“Positive rate of inflation in March is primarily due to increase in prices of manufacture of food products, other manufacturing, food articles, electricity and manufacture of textiles etc,” a statement by Commerce & Industry Ministry said.
Published on April 15, 2025
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