India’s retail inflation eased sharply to 3.34 percent in March, marking a 67-month low, down from 3.61 percent in February, according to official data released on April 11. The drop is largely attributed to a continued decline in food inflation, offering some relief to households and reinforcing expectations of further monetary easing by the Reserve Bank of India (RBI).
This is the second consecutive month that inflation has remained below the RBI’s target rate of 4 percent. The latest figures come just a week after the central bank implemented its second consecutive interest rate cut, lowering the policy rate by 25 basis points to 6 percent, compared to 6.5 percent at the beginning of the year.
Radhika Rao, Senior Economist at DBS Bank, noted that despite a firmer core inflation, the headline inflation for the January–March quarter undershot the RBI’s projections significantly. “This validates the central bank’s decision to shift to an accommodative stance, along with a rate cut at the April meeting. We maintain our call for further easing in June,” she said.
With inflation easing and staying below the target range, economists are increasingly optimistic about another rate cut in June, as the RBI continues to balance growth support with inflation control in a recovering economy.
