India’s retail inflation climbed to 3.4% in March due to a rise in prices of food and beverages, along with surging energy prices fuelled by the West Asia war, according to provisional data released by the government on Monday.
The number is in line with the consensus of 16 economists polled by Mint. They had pegged India’s retail inflation at 3.4% for March.
The latest CPI data is not strictly comparable with the year-ago period due to the reset of the index basket in January. Retail inflation was recorded at a revised 2.74% in January, marking the debut for the new series with 2024 as the base year. It rose to 3.21% in February.
The March inflation numbers are still below the Reserve Bank of India’s (RBI) 4% medium-term target, even as war-led inflationary pressures are building up.
Food inflation, which is a key constituent of the country’s consumer price index, under the new series stood at 3.87% in March, up from 3.47% in February. Housing inflation stood at 2.11% last month against 2.12% in February, according to the data released by the ministry of statistics and programme implementation.
RBI move
The inflation data follows the Reserve Bank of India’s move to keep at its meeting on 8 April, striking a cautious tone as it monitors the impact of surging oil prices on the economy and pledges to curb any excessive currency moves.
The central bank’s six-member monetary policy committee voted unanimously to keep the benchmark repo rate at 5.25% retaining a neutral policy stand and indicating that it is in a wait-and-watch mode.
The war in West Asia has weighed on India’s economy, prompting a slump in the rupee and raising stagflation risks. The breakdown of talks between the US and Iran has further heightened uncertainty and the risk of a resumption of conflict.
While inflation is moving up, India’s growth is also expected to moderate in the current fiscal year. India’s real gross domestic product (GDP) is estimated to grow by 7.6% (year-on-year) during 2025-26, as per the second advance estimates of the new GDP series (base year 2022-23). While the RBI expects GDP growth for FY27 to moderate to 6.9%, the World Bank has pegged India’s growth at 6.6%.