Consumer inflation eases to 15-month low in March

Consumer inflation in India, measured by the Consumer Price Index (CPI), came in at 5.66 per cent in March, according to official data released on Wednesday. That marked the lowest level of consumer inflation — also known as retail inflation — in the country in 15 months. 

The inflation reading was much better than the estimates of economists, who had pegged inflation to come in above six per cent. 

The latest data set from the Ministry of Statistics and Programme Implementation comes days after RBI Governor Shaktikanta Das-led Monetary Policy Committee (MPC) decided to keep the repo rate — the key interest rate at which the RBI lends money to commercial banks — unchanged at 6.5 per cent following a bi-monthly review. That marked the first status quo on benchmark interest rates since March 2022, when the central bank began hiking interest rates to tackle sticky inflation. 

The RBI — which aims to keep consumer inflation within two per cent of its medium-term target of four per cent, however, left the door open for further increases in the April review. The central bank tracks consumer inflation primarily for formulating its monetary policy. 

Rural inflation stood at 5.51 per cent in March, and urban inflation at 5.89 per cent, according to the latest data. Food inflation, based on the Consumer Food Price Index (CFPI), cooled down to 4.79 per cent in March from 5.95 per cent in the previous month.

"With reasonably healthy reservoir levels, and the El Nino expected to materialise only in the second half of the monsoon season, kharif sowing may not be impacted. However, any subsequent deficiency in monsoon rainfall could affect yields and food inflation, which along with any further hardening in crude oil prices remains a risk for the inflation trajectory," said Aditi Naya, Chief Economist and Head Research and Outreach ICRA Ltd 

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