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Informist, Tuesday, Apr. 8, 2025

 

By Shubham Rana

 

NEW DELHI - India's headline retail inflation rate in March was likely unchanged from February's 3.6%, according to an Informist poll of 11 economists, with a rise in core inflation expected to have been offset by a decline in food prices. CPI inflation stood at 4.85% in March last year.

 

Estimates for March CPI inflation were in the range of 3.4-3.9%. The statistics ministry will release the CPI data for March at 1600 IST on Apr. 15.

 

If India's March retail inflation comes in, as expected, at 3.6%, the average for Jan-Mar would be 3.8%. This would be a huge 60 basis points lower than the Reserve Bank of India's forecast of 4.4% for the quarter. Similarly, a March print of 3.6% would lead to inflation averaging roughly 15 bps lower than the central bank's forecast of 4.8% for 2024-25 (Apr-Mar) .

 

The sharp undershooting of inflation in the last quarter of FY25, in conjunction with weakening growth, pushed the RBI's Monetary Policy Committee to cut the repo rate in February for the first time in nearly five years. The committee is expected to do so again on Wednesday and lower the repo rate to 6.00%, with economists predicting another couple of rate cuts in 2025.

 

While headline CPI inflation dropped below 4.00% in February after a gap of five months, it is seen staying around the RBI's medium-term target for much of 2025 on the back of lower food prices.

 

In March, 'food and beverage' inflation as per the CPI likely fell to 3.27% from 3.84% in February, according to Teresa John, deputy head of research and economist at Nirmal Bang Institutional Equities, with Bank of Baroda saying that its Essential Commodities Index was down 1.4% year-on-year in March. "The major downward correction was visible in the case of vegetables and pulses," Bank of Baroda Economist Dipanwita Mazumdar said in a note.

 

Prices of tomato, onion, and potato fell 8.3%, 5.2%, and 6.5%, respectively, in March from February, data from the Department of Consumer Affairs showed. "Other than this, even retail prices of miscellaneous items such as salt, milk, and tea are also softening," Mazumdar added.

 

While food inflation is expected to have declined last month, core inflation likely rose, economists said. Core inflation--or inflation excluding food and fuel items--likely rose to 4.1-4.3% in March from February's 15-month high of 4.0%, driven by higher gold prices. On the whole, price rises are seen muted over the coming months.

 

"We believe that inflation will average circa 3.5% over the next 6 months, well below the 4% target, led by lower food and core prices," HSBC economists led by Pranjul Bhandari said in a note Monday. "Food inflation is likely to fall further from April when the new wheat crop hits the market. Core inflation, too, will likely remain soft, led by the recent appreciation of the rupee, imported disinflation from China, softer oil prices, and weaker domestic growth."

 

The following is a summary of the poll on CPI inflation in March:

 

ORGANISATION	CPI INFLATION ESTIMATE
IDFC FIRST Bank	3.4%
CareEdge Ratings	3.5%
Kotak Mahindra Bank	3.5%
Sunidhi Securities	3.50%
STCI Primary Dealer	3.55%
Bank of Baroda	3.56%
HDFC Bank	3.6%
Nirmal Bang Institutional Equities	3.65%
Acuite Ratings and Research	3.8%
India Ratings and Research	3.8%
ICRA	3.9%

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Vandana Hingorani

 

 

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