Retail inflation eases to 5.66% in March, back within RBI’s comfort zone after 2 months

By India Today Business DeskIndia’s retail inflation in March is back within the Reserve Bank of India’s comfort zone in March after staying above 6 per cent for the first two months of 2023.

The consumer price index-based (CPI) inflation eased to 5.66 per cent, as per data released by the National Statistics Office (NSO).

As per the data, rural inflation stood at 5.51 per cent, while urban inflation was higher at 5.89 per cent. Meanwhile, the Consumer Food Price Index fell to 4.79 per cent, compared to 5.95 per cent in February.

The development comes as a relief for the central bank, which kept key rates unchanged in its last policy review after back-to-back hikes.

It may be noted that retail inflation stood at 6.44 per cent in February 2023 and 6.52 per cent in January, after falling to a 12-month low of 5.72 per cent in December.

This is the first time this year that retail inflation has fallen below the RBI’s upper tolerance limit of 6 per cent.

However, analysts said earlier that a fall in inflation in March does not mean a similar trend would be seen in the upcoming months.

While inflation eased in March, the prices of some essential food items such as milk, sugar and pulses continue to remain elevated. Going forward, retail inflation could increase again if India sees a longer spell of heatwaves.

A recent poll of economists conducted by news agency Reuters suggests that the RBI will likely keep interest rates unchanged at least until the end of this fiscal year.

According to them, the RBI will first evaluate the delayed impact of previous hikes on economic growth and high inflation.

In its recently concluded April policy review, the RBI surprised most analysts by keeping the key repo rate unchanged at 6.50 per cent after six consecutive hikes. However, it left the door open for further hikes if necessary.