Economy
Retail inflation likely down to 3.5% in March, allowing RBI rate cut: Mint poll
Summary
Inflation likely eased further, making it easy for the Reserve Bank of India to cut the policy repo rate amid the tariff-led uncertainty and risks.
Retail inflation is likely to have eased further to 3.5% in March from 3.6% in the previous month, thanks to declining food prices, showed a Mint poll of 14 economists. If the poll prediction comes true, it would mark the second consecutive month of sub-4% print and the longest streak of continuous inflation easing in at least five years.
Economists polled by Mint projected the consumer price index (CPI) inflation in a range of 3.3-3.9%, with three economists expecting inflation to rise from February. The official data is scheduled to be released on 15 April.
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“We expect inflation to have decelerated on the back of continued decline in food prices, especially vegetables. The usual seasonal decline in food prices during the winter months was delayed this time, but was strong due to healthy fresh crop arrival," said Dhiraj Nim, economist at ANZ Bank.
Food inflation, which accounts for 40% of the inflation basket, declined to 3.8% in February, a sharp turnaround over the past few months from the double-digit rate seen in October last year. Vegetable inflation, which entered disinflation territory in February after recording double-digit growth in all but one month between November 2023 and January 2025, helped bring overall inflation down.
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Despite the recent easing, the average inflation for 2024-25 will be 4.6% (taking the poll prediction for March into account), higher than the central bank’s medium-term target albeit lower than its projection of 4.8%. According to RBI projections given last week, inflation is expected to remain below 4% for most of the current financial year. The RBI sees full-year inflation at 4.0%, with 3.6% in Q1, 3.9% in Q2, 3.8% in Q3, and 4.4% in Q4.
As such, the central bank, which delivered its second rate cut this year, is largely expected to cut again by 25 basis points in June.
Also read | Mint Quick Edit | Inflation: In RBI’s control at last?
