NEW DELHI: Retail inflation in March eased to 3.34% driven largely by a sharp fall in food inflation, which dropped to 2.69%.
While rural India experienced a headline inflation of 3.25%, with food inflation at 2.82%, urban centers saw a slightly higher headline inflation of 3.43%, but lower food inflation at 2.48%.
Other sectors also experienced varying levels of inflation. Housing inflation stood at 3.03%, while education and health saw higher inflation rates of 3.98% and 4.26%, respectively. Transport and communication inflation was recorded at 3.30%.
According to Aditi Nayar, Chief Economist, ICRA, the unexpectedly sharp sequential fall in the headline CPI inflation in March 2025 was predominantly led by food items, such as meat, eggs and vegetables, whereas a number of other groups reported a modest rise in inflation.
However, she observed that a rise in temperatures going ahead could raise prices of perishables in the coming weeks.
"While the initial forecast of an above normal monsoon is encouraging, the timing and distribution will be key for the implications for agri output and food inflation going ahead," she says.
The sharp fall in March inflation has raised the hopes for another 50 bps repo rate cut over the next three policies.
"With the next inflation print also expected to be sub-4%, a June 2025 rate cut seems highly likely, unless Q4 FY2025 GDP growth surprises sharply to the upside," added Nayar.