India's retail inflation eases to 3.34% in March; lowest since August 2019

India's retail inflation eased to a nearly six-year low of 3.34% in March 2025, driven by a sharp fall in food prices, official data released on Tuesday showed.

The year-on-year inflation rate based on the All India Consumer Price Index (CPI) stood at 3.34% in March 2025, down from 3.61% in February 2025.

Food inflation, measured by the Consumer Food Price Index (CFPI), dropped sharply to 2.69% in March from 3.75% in February. The decline of 106 basis points in food inflation is the steepest since November 2021.

The fall in overall and food inflation was primarily led by price moderation in vegetables, eggs, pulses, meat and fish, cereals, and milk products.

A Reuters poll had predicted a steady rate of inflation as a sharp rise in gold prices was expected to offset food prices.

"We are expecting very flattish inflation for March," Reuterd had quoted Indranil Pan, chief economist at Yes Bank, as saying.

"Vegetable prices have come down, though the drop is less on a month-on-month basis than we have seen in January and February... (but) higher gold prices will likely limit the fall in core inflation." In rural areas, the headline inflation eased to 3.25% in March from 3.79% a month ago, while food inflation fell to 2.82% from 4.06%. Urban inflation, however, saw a marginal uptick to 3.43% from 3.32% in February, even as food inflation dropped to 2.48% from 3.15%.

Housing inflation for March was recorded at 3.03%, up from 2.91% in February. Fuel and light inflation turned positive at 1.48%, recovering from a contraction of 1.33% in the previous month.

Among individual items, coconut oil recorded the highest inflation at 56.81%, followed by coconut (42.05%), gold (34.09%), silver (31.57%), and grapes (25.55%).

On the other hand, ginger (-38.11%), tomato (-34.96%), cauliflower (-25.99%), jeera (-25.86%), and garlic (-25.22%) were among the top items showing deflation.

Last week, the Reserve Bank reduced the key short-term lending rate (repo) by 25 bps in the wake of easing inflation.

The Reserve Bank has projected CPI inflation for the current fiscal 2025-26 at 4%, with Q1 at 3.6%, Q2 at 3.9%, Q3 at 3.8%, and Q4 at 4.4%. The risks are evenly balanced.