India’s retail inflation eased further to 3.34% in March, down from 3.61% in February, marking the lowest year-on-year reading since August 2019, according to data released by the Ministry of Statistics and Programme Implementation.
The significant decline was primarily attributed to a steep drop in food prices. The Consumer Food Price Index (CFPI) dropped to 2.69% in March from 3.75% in February—the lowest level since November 2021. Major contributors to the fall included reduced prices of vegetables, eggs, pulses, meat and fish, cereals, and milk products.
Consumer Price Index (CPI)-based inflation remains well within the Reserve Bank of India’s (RBI) medium-term target of 4%, and comfortably inside its 2-6% tolerance range.
Rural inflation eased to 3.25% in March from 3.79% in February, while rural food inflation declined more sharply to 2.82% from 4.06%. Urban inflation, on the other hand, edged up to 3.43% from 3.32%, although urban food inflation dropped to 2.48% from 3.15%. Housing inflation in urban areas rose marginally to 3.03% from 2.91%.
Meanwhile, wholesale price inflation (WPI) also moderated to 2.05% in March from 2.38% in February, as per data from the Ministry of Commerce and Industry. The easing in WPI was largely due to lower prices in the food, fuel, and power segments, despite continued increases in the prices of manufactured goods.
For FY26, the RBI projects CPI-based inflation at 4.0%, assuming a normal monsoon. Inflation is expected to remain subdued in the first half of the fiscal year, with quarterly projections at 3.6% for Q1, 3.9% for Q2, and 3.8% for Q3, before rising slightly to 4.4% in Q4.
