Retail inflation in March fell to a 15-month low of 5.66% and came back to the Reserve Bank’s comfort level of 6%, as prices of vegetables and protein-rich items eased, showed government data released on Wednesday, April 12.
The retail inflation based on Consumer Price Index (CPI) was 6.44% in February 2023 and 6.95% in the year-ago period. The previous low was also 5.66% in December 2021.
The Reserve Bank has been mandated by the government to ensure inflation remains within the 4-6% bracket. The CPI was above 6% in January and February.
According to the National Statistical Office (NSO), the year-on-year inflation declined in the vegetable basket by 8.51%, oil and fats by 7.86% and meat and fish by 1.42% in March.
However, the rate of price rise in spices was high at 18.2% in March, followed by ‘cereals and products’ by 15.27%. Fruits too were expensive. The overall inflation in the food basket was 4.79% in March against 5.95% in February and 7.68% in the year-ago period. The food basket has a weightage of 54.18% in the overall CPI.
Aditi Nayar, Chief Economist and Head Research and Outreach, Icra, said unless the feared heatwave leads to a rapid rise in prices of perishables, inflation may report a substantial base-effect led drop to around 5-5.2% in the next two prints, which will reinforce the decision of the RBI’s Monetary Policy Committee (MPC) to pause key interest rate in April 2023.
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